PKG Poor Man's Covered Call: Strike Selection, Premium & Risk
How to sell poor man's covered calls on Packaging Corporation of America — optimal strikes, expected premium, and the risks that actually matter for a mid-cap materials name.
Is PKG a good poor man's covered call candidate?
PKG (Packaging Corporation of America) is a mid-cap materials name with a mid-range share price and fair options liquidity. Implied volatility is low, so premiums are modest. Traders use this name when they want stability and a low probability of assignment rather than maximum yield. It also pays a dividend, which adds a second income stream on top of the premium you collect.
Strike selection for a PKG poor man's covered call
For a PKG PMCC, buy a long-dated call with 0.80+ delta (typically 12-18 months out) as your synthetic long, then sell short-dated calls 3-5% above the stock price at 0.25-0.35 delta. The LEAPS tie up roughly 30-50% of the capital of buying 100 shares, which is especially valuable on a mid-range share price ticker like PKG.
Expected premium and income on PKG
Typical monthly premium collected on PKG runs around 0.5-1.0% of capital, which annualizes to roughly 6-12% if you sell new contracts every cycle. Capital required to run a single contract wheel on PKG is $5,000-$20,000 — the share price and the 100-share lot size set the minimum, not the strategy.
Risk management for PKG poor man's covered call trades
PMCC risk is concentrated at the LEAPS expiration: if the stock collapses, the long-dated call can lose significant value quickly. You also have to manage the short call not going deep in the money against you before your LEAPS appreciates equivalently. PKG is a low-volatility name — the main risk is not sudden moves but slow grinds against you, which hurt covered-call writers who picked strikes too close to the money. Materials are commodity-linked, so moves in copper, steel, and agricultural prices drive the stock more than company-specific news.
PKG Poor Man's Covered Call FAQ
Can you run a poor man's covered call on PKG?
Yes. Buy a 0.80+ delta LEAPS on PKG dated 12-18 months out as your synthetic long, then sell short-dated calls 3-5% above the stock at 0.25-0.35 delta. Capital tied up drops from $5,000-$20,000 to roughly 30-50% of that — a meaningful improvement when the share price is a mid-range share price.
What expiration should I use for PKG poor man's covered call trades?
Use 30-45 DTE as a default for PKG. This is the classic theta sweet spot and works well on a stable ticker like this.
Is PKG suitable for beginners selling options?
Mostly yes, though beginners should use small size and confirm liquidity on each expiration they trade. Always check the bid/ask spread before entering — anything wider than 5% of the mid price is a warning sign.
Related PKG strategies
Price a PKG poor man's covered call right now
Use the free OptionsPilot calculator with live quotes to find the best poor man's covered call strike on PKG.
Open the Strike Finder →