When you’re trying to build wealth starting with a relatively small amount of money, it may seem that the growth process is much slower than you want it to be. Let’s look at the example that we’re using with starting with this $10,000 account. We’re 20 weeks into this process and we started out by having a target of generating $70 in premiums for the first week. Now that we’re in week 20 our target is up to $79.92 in premium. To some that may be like a small increase.
This is one of the hardest parts of building wealth. Seeing small gains in the early stages can seem discouraging. You might think that this is a lot of work for just getting $70-$80 a week in premiums. It’s important to look ahead to what the continual compounding will mean over a longer period of time.
As I mentioned in my week 2 update, if we’re able to consistently perform at this same level for several years the effects will be significant. At the end of 5 years our account will have grown to over $60,000 and we’d be generating over $400 a week in premiums. After 10 years, the account will have grown to about $376,000 and we’d be generating about $2,600 a week in premiums. By the time 20 years will have gone by the account will have grown to over 14 million dollars and we’d be generating nearly $100,000 a week in premiums.
These of course are just the raw numbers based on the compounding growth. It doesn’t take into account if you were to withdraw any of the funds during the process for things such as taxes. Of course if you’re doing this in a Roth IRA the growth would all be tax free as long as you left it in the account until age 59-1/2.
Week 20 Results
The market overall did very well this week which helped our positions. Here are the positions we started the week out with:
We only had one put with an expiration date for this week, but QBTS was in a good place on Monday. I opened a new position by selling a put on AAOI with a strike price of $22.50 and an expiration date of 9/19. This one was a higher strike price than I normally do with this size account. So I chose a strike price that was a little further out of the money with a delta of around -0.35. I was able to collect a premium of $85 for this trade.
By Friday the share price of QBTS was well above my strike so I was able to let my QBTS put expire. Here is a chart of my trades since the beginning of August:
Summary
So for week 20 I collected a total of $84.92 in net premiums. My target for week 20 is $79.92. Total net premiums collected for the first 20 weeks is $1,637.52. My target premiums for the first 20 weeks is $1,497.13. I am ending the week with using a little higher than normal amount of my cash as collateral at $5,500. But at least at this point things are looking good for my AAOI put to be able to expire next week. The share price for SERV has made a nice recovery so my hope is that SERV stays near where it is until October 10th when that put expires. And TMC has come up some in the share price, so hopefully that trend continues so that by my expiration on my TMC put I can at least roll the strike down if not let it expire.
Here is a screenshot of my account positions for the week as well as a chart of the summary for our journey so far:
Read: How to Generate Consistent Profits Through Options Trading