How to Become a Millionaire by Investing $700 per Month – Part 46/360

Almost 4 years!  

At the moment, we’re at $123,373, which is up $3,452 (2.8%) since our May 5th review and that’s because our hedges got crushed as the market flew higher 10.7% but the good news is the hedges are working – they are simply preventing gains in the same way they were designed to prevent losses!  

We are now 41 months away from hitting our $1M target (at this pace), which would be November of 2029 and, since our original goal was to hit $1M in 30 years (8/25/52) – I’m pretty happy with how far ahead of schedule we are!  

 To be clear to our new Members – this portfolio is on track to turn $123,373 into $1,003,763 in 3.5 years – so you haven’t missed much as we still have $880,390 (713%) 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.    

Before we get on with the review, however, I want to put in a commercial for yesterday’s Robo John Oliver Report’s Podcast and Video which I strongly encourage you to add to your Social Media – as it’s a very important issue I feel needs to be discussed before it’s gets out of control:  

On a connected note: Florida filed a landmark, first-in-the-nation lawsuit against OpenAI and CEO Sam Altman, accusing them of prioritizing commercial growth over user safety. The state alleges that ChatGPT poses severe risks, particularly to children and points to several violent crimes where suspects used the AI to plan attacks.

While I’m sure Google was used to plan all sorts of violence in the past 20 years, what ChatGPT is doing by infiltrating our school systems is far more insidious. It’s like when your parents spend 10 years watching Fox News or CNN or whoever you disagree with – you can’t quite pin WHEN it happens – but you know they’ve been changed!  

Anyway, please check it out and PLEASE share – people need to be aware of what’s going on here…

If you are just joining us, we began on Aug 25th, 2022 with $700 and each month we added $700 ($32,200) 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 45/360 

  • 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

Now we are all caught up.  We have $82,969 in positions and $42,404 in CASH!!! And our SQQQ hedges have been killing us – but they are insuring the rest of the portfolio.  Let’s take a look:  

• • HELE – Well over our target at net $4,250 with $3,250 (76.4%) left to gain. The problem with performing so well early on is even if HELE holds $20 and we make the next 76.4% – it’s still UNDERPERFOMING compared to our annual 70.5% average returns. That’s why I warned, back in the spring – that our rate of gains would not be sustainable.  
  • Still, certainly not something we want to throw way – unless we find something MUCH better to do with $4,250. 

• • PATH – On track at net $2,160 on the $5,000 spread with $2,840 (131%) of upside potential but will we get there by January? Earnings were messy so we’ll have to keep an eye on them.    

• • SQQQ – Not only did our hedge take a severe beating this month but it’s now out of position so we’ll have to spend $5,730 to roll the $50 calls ($11.18) to the $30 calls ($15). The brings our net to $8,430 on what would be a $45,000 spread at $60 (20% Nasdaq drop) so we’ll call it net $36,570 of downside protection.  

• • CLF – Way over our target at net $2,550 and now we can roll the 10 short July $10 calls at $4 ($4,000) to 15 short Sept $13 calls at $2.60 ($3,900) for net $100. That leaves 5 short calls uncovered so we’ll buy 5 2028 $12 calls for $5.70 ($2,850) and now our spread is $3,000 + $500 but still 16 months to roll the short calls higher still.  Let’s call it $5,000 (90%) upside potential. 

• • UNG – Right on the money for the June expiration – we’ll have to check back in in two weeks. We paid net $1,250 for the spread and we’ll sell 2 or 3 more rounds of $500+ premium so we’re on the way to a free trade and /NG should hit $14 by hurricane season is $2,000 of upside potential.  

• • B – A little over our target but gold slipped a little and look at that descending top line. I’d rather keep the insurance! The spread is only net $2,882 and we have $6,400 on the $32/40 spreads plus the ability to roll 3 of them higher so AT LEAST $3,518 (122%) upside potential and this one is Good for a New Trade!  

• • CAG – The June calls are already worthless and earnings should be around July 1st so let’s give them a chance to bounce (fingers crossed!). It’s a $6,000 spread at net $2,648 and I still think $17 is realist so that’s $3,352 (126%) upside potential.  

• • ET – At our goal 18 months early. It’s a $3,000 spread at net $1,772 so $1,228 (69%) upside potential and this seems so certain to me that I’ll call it Good for a New Trade – as you have to weigh in the odds of success too.  

• • GEO – Blew over our target and it’s all on Government contracts so we may as well make a bullish adjustment: Let’s roll (this is essentially a new trade) our 10 2028 $13 calls at $12.35 ($12,350) to 15 2028 $18 calls at $9.50 ($14,250) and let’s roll our short calls ($2,725 + $3,500 = $6,225) to 15 short Sept $23 calls at $2.70 ($4,050) and let’s say we end up at $27 for a $9 ($13,500) spread. 
  • We actually rolled 5 of the short June $18s to 5 short Sept 20s last month so this roll includes that too – so all 15 should be short Sept $23s now. 
  • So, the net was $6,125 on a $5,000 spread that would be difficult to roll (so we cashed it out) and now our net is ($6,125 + $1,900 + $2,175 =) $10,200 on the $13,500 spread with $3,300 (32.3%) upside potential PLUS (and this is why we did it) 5 more chances to sell $4,050 in premium ($20,250 – 198%).  

GEO has performed EXACTLY as we expected and it’s a nice steady gain we can make money on so why not make our next $23,000 there instead of gambling $4,000 on something new?  

• • HPQ 1 – Another one that blew past our goal already. We’re at net $4,677 on the $8,000 spread so there’s $3,324 upside potential if we leave it alone. We do have to roll the 3 short June $19 calls ($3,158) to 3 short Jan $25 calls at $7.40 ($2,220) to pick up some more premium ($2.74 – $822) and widen the spread for net $938 (and we still have the $525 they paid us in Feb).  
  • HPQ 2 – This one had a mistaken entry when I started the post so refresh for corrected numbers. Kind of the same deal as above and we’ll roll the 5 short July $22 calls ($3,688) to 10 short Sept $29 calls at $4 ($4,000) and we’ll buy 5 2028 $30 calls for $7.50 ($3,750) to cover. 
  • That widens the main spread to $16,000 and we spent $3,438 on the adjustments and our net was $5,050 on the $7,500 spread and now it’s $8,488 on the $16,000 spread with $7,512 (88.5%) upside potential (more with more rolls) and we’re in shape to sell 5 more sets of $4,000 in premium for another $20,000 (235%). 

In this case, trading is a lot like gardening: You don’t keep buying new plants – you take care of the ones you have!  

• • M – Brand new and Good for a New Trade at net $4,058 on the $7,500 spread with $3,442 (84%) upside potential PLUS 5 more chances to collect $1,050 is potentially another $5,000 (123%).  

• • NVO – Right on track at net $7,975 on the $$15,000 spread so there’s $7,025 (88%) upside potential PLUS 5 more chances to sell $2,375 in premium is another potential $11,875 (148%) – that’s the kind of balance I like!  

• • PFE – Our Trade of the Year!  Not doing anything so far so, Good for a New Trade and we’ve already cashed in short calls for profits.  As it stands now, it’s net $2,042 on the $5,000 spread so that’s $2,958 (144%) upside potential PLUS 6 more chances to sell $320 is $3,720 (182%) so, once again, nicely balanced!  

PR – Another obvious macro trade we played for Quixotes “Age of Atoms‘ premise (he does say it A LOT!). This is why we don’t panic out of positions – we WERE getting burned and now it pulled back. Stocks go up AND down – even when they’re going up. PR “missed” on earnings because they’re investing in expansion – not a reason to bail. I don’t know why we don’t have them in the LTP – must rectify that!  

For $1,900 I’d like to buy 5 more 2028 $20 calls. Then we don’t care if they go up and, if they don’t go up – we’ll sell 5 more short calls and double our quarterly income – we can’t lose!  

So then we have net $850 (current spread) + $1,900 is $2,750 on the (the 2028 $22s are $2.20 so I’ll call that our roll target) $7,000 spread that’s $5,000(ish) in the money so I’d say that’s actually Good for a New Trade (see how math is important?) with $4,250 (154%) upside potential PLUS (imagine if we DIDN’T do the pluses!) let’s say 3 more chances to sell $3,200 is $9,600 (349%).  

We’re doing this with NO MARGIN!!!

I get excited because I impress myself with these things sometimes – how is it more people don’t know about this? I can’t figure it out – I’ve been teaching this for 20 years…

• • SOFI 1 – I can’t believe they are on sale again!  Fantastic for a New Trade – people are idiots! Analysts are idiots (not counted as people)! So we’re at net $3,502 on the $8,000 spread (same rolling logic – the July $17s are much less than the 2028 $23s so OBVIOUSLY we can roll to an $8 spread or better) with $4,498 (128%) upside potential. They just had good earnings with cautious guidance.  
  • The 2028 $13 calls are $8.60, which picks up $2 in position for less than $1 so let’s do that for less than $1,000 and we’ll see how things go into July.  
  • SOFI 2 – We have a bit more upside and we’re not so rich that I want to spend $2,500 on this roll – so we’ll leave it alone other than buying back the short June $20s ($385) and selling 10 Sept $19s for $2.20 ($2,200) to put another $1,815 in our pocket which expires in 3 months.  

So, if we waited a month (2 weeks, actually) for the short June calls to expire, we’d pick up $385 but the $2,200 Sept $19s have 15 weeks to live so they burn $146/week – it’s the same(ish) decay BUT, in a downside turn – we’ve got $1,815 more protection NOW!  

• • UUUU – Thank goodness for the short calls or we wouldn’t be making any money! Essentially it’s just on track at net $12,737 on the $40,000 spread so that’s $27,263 (214%) of upside potential PLUS another year we can sell $10,500 (82.4%) into. 

I’d say this is the stock that makes me most nervous because we’re basing our bullishness on Trumps fickle favoritism so we need to always check the news for the “vibes” on this one.  

Overall the current positions have $ $83,762 (64.8%) in upside potential and another $80,000(ish) (61.8%) of potential premium sales. That means we can’t coast if we want to keep up this incredible 75% annual return rate but we’re certainly on track and, best of all, this includes $36,570 in downside protection against a 20% market drop – so we can afford to be a bit aggressive while the rally remains strong.