I am trading the XBI ETF for weekly income using a poor man’s covered call (PMCC) strategy. I journal my rationale, trades, and lessons learnt here. (Jan 2026 to present). I will be updating this post regularly until the whole strategy is closed.
Summary (Updated on 22 Apr 2026)
| Type | Platform | No of Closed Trades | Capital | Income | ROI |
|---|---|---|---|---|---|
| LEAP | Moo | 1 | 2,521.11 | 408.89 | 16.22% |
| PMCC | Moo | 7 | 854.83 | 33.91% | |
| LEAP | FT | 0 | 3,209.04 | 593.86 | 18.51% |
| PMCC | FT | 3 | 253.88 | 7.91% | |
| Total | 5,730.15 | 2,111.46 | 36.97% |
Why XBI
XBI is the SPDR S&P Biotech ETF. It focuses on biotechnology companies, and its holdings include Moderna, Vaxcyte, Roivant Sciences, Arcellx, etc.
These companies focus on developing drugs, therapies and medical innovations. The narratives of most of these companies are compelling, the business models are straightforward. However, the risks are also high: research and trial outcomes, FDA announcements, and management execution.
I still believe the industry is a promising one, I just don’t want to focus on individual companies. The next best thing is to invest in the ETF.
Technical Analysis
Price is trading around $126 in Jan 2026. Liquidity is higher than most ETFs. The monthly chart shows that XBI ETF’s uptrend is intact although it has become choppier recently and trend is slowing down. Monthly implied volatility is about 33.8% offering good premium for sellers.
The PMCC Strategy
A poor man’s covered call (PMCC) is a specialized diagonal call spread designed to replicate a covered call with less capital. It fits my trading goal which is to generate income while I wait for my bullish directional bias to work out.
I compared the PMCC to other trading strategies:
Strategy 1: Position Trading
I find prices tend to drop after I take a position. Before I become more accurate with my entries, I try not to start my strategy with position trading. It also doesn’t generate income by leveraging on time decay.
Strategy 2: Buy 100 shares + Covered calls
XBI ETF was trading at $124.15 when I was planning my strategy. To buy 100 shares, I need to fork out $12,415.00. It is quite capital intensive, in my opinion.
Strategy 3: Buy a LEAP + Covered calls (PMCC)
XBI ETF’s implied volatility is around 30% to 35%. It is not too expensive for an option buyer. A 365 DTE 0.7 delta strike call costs around $2,500, a much lower capital requirement than $12,415.
The XBI ETF is also currently suitable for selling weekly options, letting me take advantage of rapid time decay.
Risks
Time decay of the LEAP: The 365DTE LEAP loses value over time but the loss is gentle until around 90-120 days before expiration. The plan is to close the LEAP trade then.
IV crush: IV is high now. If IV drops significantly, the premiums for the short-dated calls will drop and it might not be efficient to keep the strategy. If this happens, I will close both calls together and hunt for better opportunities.
Weekly Calls
I’m keen to sell weekly short calls to generate weekly income from this strategy. It is an aggressive income machine strategy and carry higher risk. I will pause the strategy at first sign of trouble.
The Trades
| Trades (MooMoo) | Open Date | Expiration | Strike | Premium/ Profit | Status Note | ROI |
|---|---|---|---|---|---|---|
| LEAP 1 Intrinsic: 17.55 Extrinsic: 7.65 If I sell 26 calls (fornightly) for average premium of $100, income is $2,600. Risk/Reward: 1:1.06 Closed early together covered call 7 when its strike price was breached. | 16 Jan 2026 | 15 Jan 2027 (364 DTE) | 109.00 | ($2520.00)/ 408.89 | Closed early after 115 days | 51% |
| Covered call 1 | 10 Feb 2026 | 13 Feb 2026 (3 DTE) | 128.00 | $101.00 | Expired | 4% |
| Covered call 2 | 23 Feb 2026 | 27 Feb 2026 (5 DTE) | 129.00 | $100.00 | Expired | 3.97% |
| Covered call 3 | 2 Mar 2026 | 6 Mar 2026 (4 DTE) | 128.00 | $154.00 | Expired | 6.11% |
| Covered call 4 Price briefly breached strike but it came down quickly. | 9 Mar 2026 | 13 Mar 2026 (5 DTE) | 128.00 | $105.00 | Expired | 4.16% |
| Covered call 5 Price dipped and LEAP was in the red in mid-March. Price recovered early April. Initiate PMCC again. Rolled this call for a credit when strike price is breached. | 6 Apr 2026 | 10 Apr 2026 (5 DTE) | 132.00 | $132.00 | Rolled | 5.23% |
| Covered call 6 Rolled from #5 for a nice credit. Increase the strike price by $2.00. Roll up and out for a credit as price rose due to ceasefire. | 10 Apr 2026 | 24 Apr 2026 (14 DTE) | 134.00 | $144.00 | Rolled | 5.71% |
| Covered call 7 Roll this call up and out for a credit as price continue to climb. | 20 Apr 2026 | 22 May 2026 (32 DTE) | 136.00 | $145.00 | Closed 11 days early | 98% |
![Generating Weekly Income on XBI ETF: Poor Man's Covered Call Strategy [Active]](https://i0.wp.com/springorchidfiles.com/wp-content/uploads/Moomoo-XBI-Apr2026.png?ssl=1 "Generating Weekly Income on XBI ETF: Poor Man's Covered Call Strategy [Active] 2")
Moomoo allows me to share screengrabs of my profit and loss on individual tickers. This is the 2026 Year-to-Date Total P/L for XBI. The total value includes covered call income + unrealized profit of the LEAP call.
| Trades (Firstrade) | Open Date | Expiration | Strike | Cost/ Premium | Status | ROI |
|---|---|---|---|---|---|---|
| LEAP 2 Intrinsic: 16.55 Extrinsic: 14.95 If I sell 46 calls (fornightly), for average premium $100, income is $4,600. Risk/Reward: 1:1.47 Rolled the LEAP back to shorten expiry date. Chose higher delta for better price sensitivity. Sold on 14 Apr for $3829. Profit: 678.93 | 5 Mar 2026 | 17 Dec 2027 (652 DTE) | 110.00 | ($3,150.00)/ 678.93 | Rolled | 21.55% |
| LEAP 2 The rolled LEAP | 14 Apr 2026 | 15 Jan 2027 (276 DTE) | 109.00 | ($3,209.00) | Open | |
| Covered call 1 | 5 Mar 2026 | 6 Mar 2026 (1 DTE) | 126.50 | $64.00 | Expired | 2.03% |
| Covered call 2 Price briefly breached strike but it came down quickly. | 9 Mar 2026 | 13 Mar 2026 (5 DTE) | 128.00 | $105.00 | Expired | 3.33% |
| Covered call 3 Waited till April for price to recover before selling call. | 20 Apr 2026 | 24 Apr 2026 (4 DTE) | 140.00 | $85.00 | Expired | 2.65% |
| Covered call 4 Sold the call when price rose a little. | 4 May 2026 | 15 May 2026 (11 DTE) | 138.00 | $109.00 | Open |
Disclaimer: This post is a personal account of my investing and trading journey. I’m not a financial adviser. Please perform your due diligence before investing.
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