Frankly, I have never heard about this before I visited Reddit the gang. As it turns out it is a short options strategy against LEAPS. This begs the question, how do you handle assignments or being called as it is part of the game! The answer you do not, you scream and panic and get out from a position with a loss. There is no other way!
I'm not all that on board with the cutesie names for the different spreads. A diagonal is a diagonal... But I'm old and grumpy! Long call, at least several months out and some amount ITM, and short near term call. Yeah, it can be a levered "Cov Call," sort of. But still lots of differences and extra trading. For example you can't, probably, just buy a LEAP and hope to write short calls against it for months and months without rolling it as the underlying moves. Deltas will get far out of whack. My suggestion is to ALWAYS graph any option spread out so you will know exactly what can happen. Exercise and assignment risk are like any spreads. Better know what bad things are waiting for you, or one fateful day...boom.
Exercise and assignment are not the worse that can happen, at least you keep the premium...but with this goofy strategy (poor man's cc), you can only hope and wish...
This is the equivalent to selling a butterfly with some extra risks (opportunities to make or lose money). there’s nothing poor man about it. Just a different pnl payout.