How to Become a Millionaire by Investing $700 per Month – Part 45/360

Slippage!  

The market rose so fast since our last review (April 9th) that we lost a little ground to our short call positions. As it stands, we are now at $119,921 in month 45 but we’ve only put in $31,500 ($700 x 45) and that means we’ve gained $88,421 (280.7%) despite the fact that, in this particular month, we’re down $4,528 (3.6%). 

It will now take us 42 months (October, 2029) to get to $1M at this pace but that’s still a 7.25-year pace – far, FAR better than the 30 years we expected to take and we added a few positions this month (CLF, F, UNG, CAG, ET, PFE and SOFI) and there is always some “friction cost” when you add new trades to your portfolio – as the broker tends to price in a worst-case scenario for options spreads.  

And, just to be clear to new Members – this portfolio is on track to turn $119,921 into $1,022,404.15 in 3.5 years – so you haven’t missed much as we still have $902,483 (752%) left to gain!

This is just the mathematical grind of our “Be the House – NOT the Gambler!” strategy playing out in a small (not so small anymore), no-margin portfolio. For those who are new – here’s me discussing the strategy with Forbes.    

The S&P 500 was at 6,824 on April 9th and yesterday we closed at 7,200 (up 5.5%) – a bit more movement than we like in our conservative portfolio. Despite our shopping spree, we still have $20,094 (16.7%) in CASH!!! – down from 25.8% last month. Here’s the strategy we’re following:  

If you are just joining us, we began on Aug 25th, 2022 with $700 and each month we added $700 ($31,500) so far and each month we find things to buy under NO MARGIN rules (for 401K/IRA players). This is, despite the huge gains, a fairly conservative portfolio and we are generally quick to take our profits and run – as we always seem to find new opportunities to make more.  In the past year, our 12 prior Portfolio Reviews were:

• • How to Become a Millionaire by Investing $700 per Month – Part 44/360

  • How to Become a Millionaire by Investing $700 per Month – Part 43/360

  • How to Become a Millionaire by Investing $700 per Month – Part 42/360

  • How to Become a Millionaire by Investing $700 per Month – Part 41/360
  • How to Become a Millionaire by Investing $700 per Month – Part 40/360
  • How to Become a Millionaire by Investing $700 per Month – Part 39/360
  • How to Become a Millionaire by Investing $700 per Month – Part 38/360

  • How to Become a Millionaire by Investing $700 per Month – Part 37/360 – Year 4 Begins!

  • How to Become a Millionaire by Investing $700 per Month – Part 36/360 – 3 Years In!

  • How to Become a Millionaire by Investing $700 per Month – Part 35/360
  • How to Become a Millionaire by Investing $700 per Month – Part 34/360
  • How to Become a Millionaire (EVEN in This Market) by Investing $700 per Month – Part 33/360

Now we are all caught up.  We have $99,827 in positions and $20,094 in CASH!!! And our SQQQ hedges have been killing us – but they are insuring the rest of the portfolio.  Let’s take a look:  

• • ARCC – Earnings were a bit of a miss but they were so oversold that they still bounced. The problem is the short June $19 calls are just 0.65 – so they are not worth selling and this situation will not change (because ARCC pays out huge dividends, which stymies growth) so we’re going to cash this out.   
  • HELE – Well over our target and our $7,500 spread is currently net $3,800 so $3,700 (97.3%) left to gain is worth holding and good for a new trade.  

• • HPQ – Finally broke over $20 and still stupidly cheap so we’ll stay aggressive at net $4,925 on the potential $7,500 spread so there’s $2,575 (52.2%) left to gain but more than that with 1/3 of our longs uncovered – so worth keeping.  Still earnings are coming up so let’s be responsible and sell 5 short July $22 calls for $1.30 ($650).  

There are 6 more quarters left to sell so potentially $3,900 (plus this $650) is almost TWICE as much as we can make on the spread so we don’t let our EGO determine our position. I STRONGLY believe HPQ will pop on earnings but that doesn’t mean we shouldn’t DO OUR JOB and sell premium. This is NOT a speculative portfolio – this is a MATH portfolio! 

• • PATH – We’re down a bit on this one but I still like it as a new trade at net $1,580 on the $5,000 spread with $3,420 (216%) left to gain if PATH can make it back to $15 in 7 months. 

• • SQQQ – Here’s all our losses! We’re down $9,990 on our hedges as the Nasdaq flew higher – so much so that we need to adjust. The 2028 $50 calls are $18 so it will cost us $4.40 ($6,600) to roll 15 calls lower and 2 we’ll just cash out ($2,720) and a 20% drop in the Nasdaq only takes us to $80 so there’s no sense in the short calls, so we’ll buy those back ($13,485) and sell 15 2028 $90 calls for $12.65 ($18,975) so we’re taking net net $1,610 off the table, leaving us with a $60,000 spread and our original net was $19,625 and now $18,015 is the cost of our insurance so, overall, we have $41,985 of downside protection. 

• • CLF – Physics Trade is working well. We’re just letting the premium expire against our longer calls at the same strike. We have 6 more quarters to sell $1,200 and let’s say it’s 50/50 going forward – that’s still $3,600 of premium sales and whatever value is left on the 2028 $10s will be a bonus – let’s say $2,000 at $12 is $5,600 (186%) upside potential.  

• • F – So stupidly cheap but the war drags on and Oil is $102.89 this morning.  We’re at goal and they just had earnings, which were a huge beat but sales are down 14.4% because EV sales are down 31.1% so I’m not feeling too brave and there’s only 25% left to gain over 2 years so let’s take our small profit and close it out.  
  • UNG – Another physics play and good for a new trade. We have 3 more quarters to sell $800 so potentially $2,400 plus whatever the long calls are worth in Jan so let’s say $14 adds $2,000 that would be $4,400 less the current net $1,218 is $3,182 (261%) upside potential by January!  

• • B – Grinding it out on track at net $2,659 on the $6,400 spread so there’s $3,741 (140%) upside potential.

• • CAG – Still has that new trade smell at net $2,962 but those short calls are dead so let’s buy them back ($38) and wait for the bounce. It’s a $6,000 spread with $3,038 (102%) upside potential and we just made $313 on our short calls so 6 more of this is another potential $1,878 (63.4%) in premium sales.  

• • ET – Net $1,834 on the $3,000 spread has $1,166 (63.5%) upside potential but we’re in it to sell 6 more $260s for $1,560 (85%) of additional potential and that’s why it’s still good for a new trade! The JUST missed earnings but the stock is up anyway (too cheap).  

• • GEO – Boy do I hate this company! The stock, however, is great! Already over our target at net $5,362 on the $5,000 spread but it’s rollable so let’s roll the 5 June $18 calls ($938) to 5 short Sept $20 calls at $2.15 ($1,075) so we’re dropping net $137 in our pockets and widening the spread to $7,000 and so it will keep going, quarter by quarter.  I will guesstimate we end up with a $10,000 spread so let’s say there’s $4,638 (86.4%) upside potential – but I think we’ll end up doing better than that with these fat premiums to sell.  

• • HPQ – 2nd batch of these. It’s a n $8,000 spread at net $3,886 so there’s $4,114 (105%) upside potential and 5 more quarters to sell $525 is $2,625 (67.5%) potential, because this June sale was a miss and we’ll have to roll to Sept $21s, which are $2.25 at the moment but we’re not going to pay 0.70 (27% of the short call’s price) to do it so we’ll see how it goes.  
  • NVO – Well now I’m glad we kept them! It’s a $15,000 spread at net $7,500 so $7,500 (100%) upside potential and we’re burned on the short June $40 calls ($2,863) so let’s roll them to 5 short Sept $45 calls at $4.75 ($2,375) for $500 so we didn’t make our $1,625 this quarter but we are rolling up $2,500 in strike for $500 AFTER the stock has proven it can get to $45 – see how cool this system is?!?  

And, don’t forget, we did collect $1,625 for those short June calls and we’re “only” giving $500 back so we’ve effectively now sold the Sept $45s for net $1,125 AND we’ve widened the spread by $2,500 – not a bad quarter! 

• • OWL – Nicely over $10 now and I’m so relieved as I was really banging the table on them into earnings. Let’s buy back the 3 short May $11 calls as we oversold those anyway and the 5 short May $8 calls ($1,138) can be rolled to 5 more short Jan $10 calls at $1.70 ($850) for net $288 but we collected $500 initially so now we are in those short tens for net $350 (0.70) and we have a $2 spread ($2,000 potential) and a year to roll after that, so let’s say $13 (2028 $13s are $1.80) would be a $5,000 spread from our current net $1,374 is net net $3,626 (263%) upside potential and we just bought this for net $120!  

• • PFE – Brand new trade so still good.  There should be 4 short calls, not 10 and the correct net is $2,232 with $2,768 (124%) upside potential and 6 more quarters to sell $320 is another potential $1,920 (86%) bonus dollars.  

• • PR – Interestingly, this is a net CREDIT of $825 and it’s a $4,500 ($10/19) spread plus a physics spread we’ll have to wait and find out about but even is fine on that 5 as ($4,500 + $825 = $5,325 (645%) upside potential PLUS whatever we can roll the short calls higher than $20 x 500 more upside potential.  Tune in to find out!  AMAZING for a new trade, obviously!  
  • At $4.35 the short Oct $19s have about $1 in premium left but they are also PROTECTING our $10/19 spread so no need to roll them yet. The Jan $21s are $3.10, so that’s our target roll, adding $3,000 of upside potential to the longs for hopefully and even roll as the premium wears out on the October calls.  
  • 2028 $22s are $4.50 for reference, that would give us a $6,000 + $2,000 spread for $8,825 – a 1,000% potential gain from our $825 credit if all goes well…  

• • SOFI – Another brand new trade at net $3,223 on the $8,000 spread so that’s $4,777 (148%) upside potential and hopefully not to fast as we also have 6 more quarters to sell $390 in premium for another potential $2,340 (72.6%) along the way.  

• • ULCC – The death of Spirit should be good for them – unless they die too…  It’s net $12,999 on the $30,000 spread and we’re up about $7,000 and it’s just too risky to keep given the current environment – so let’s cash out.  

• • UUUU – They just keep going up but that’s OK.  We’ll roll the 5 short 2027 $10 calls ($6,325) to 5 more short 2028 $25 calls at $8.95 ($4,475) – paying net $1,850 (and we sold them for $1,775 – so net $75, really) to gain $5,000 in strike – nothing wrong with that! The Oct $15 calls at $6.88 have no premium left, so let’s roll those to 15 short Jan (2027) $22 calls at $7 and we’re back to all premium – aren’t options fun?!? 
  • That leaves us with 40 2028 $15s and our shorts are on the way to $25 so call it a $40,000 spread at net $13,162 with $26,838 (203%) upside potential – not bad for a trade that “got away from us.“

Overall, our remaining positions have $89,508 of upside potential and that sounds great but we have a lot of work to do as we need to make that much EACH year to keep up our current pace (that’s why I have warned that it will be very hard to match).  

$89,508 is “only” 74.6% of $119,894 and we also have to be mindful of counting too much on PR and UUU driving our gains (concentration risk) going forward.  

And now, a word from Gemini (AI), who is in training and learning right along with everyone else: