Charts R Us

#education FinTwit pushes a myth that you should only chase breakouts and trending stocks. This works for some, but it is a trap for others. If you are an investor, your goal is building income, not just following momentum. Take $EOSE as an example. It took a 50% haircut after being called the next generational wealth play. Once the hype died, the furus disappeared just like their moms' money. Conviction in a strategy means looking for ways to lower your cost basis through premium collection, not just praying for a price recovery. The results of active management speak for themselves. Here is the breakdown on a position I have been working for the past month: • Initial purchase price: $4.73 • Current effective cost basis: $3.47 • Total cost reduction: 27% • Current core position: +60% I achieved this without selling a single share. This drop came purely from selling calls and puts. I did not take profits, had I, I would have lowered my cost basis more. Instead, I’ll continue to generated income and recycled capital while keeping the entire position intact. Leaving capital available for the next ER drop. And…the mechanics are a lot simpler than most think. Determine your maximum capital for a conviction play. Let’s say you allocate $10,000, use $2,500 for your core position. Use the remaining $7,500 to sell puts or spreads. While the stock consolidates, generate an extra layer by selling calls. High volatility in stocks under $8 is a blessing. High IV means higher premiums for sellers. Bring it in for the real sauce for extra yield ⚠️: • Use a small portion of your unallocated capital on Thursday’s around noon. • Find a juiced ATM or ITM strike. • Buy 100 shares and sell that strike. • If the stock stays over the strike by Friday, the premium is yours and the shares are gone. This creates a 1.2% to 1.7% return on a one day hold. • If the price drops, keep the shares and sell covered calls for the following week to capture another 1.2% to 1.7% • With the goal of having this last shares to be call away. Now for the FuruKiller fact. If you do not want to count this as an ECB reduction, let's talk about yield. I pulled a 26.8% return in one month. Even if the haters say that is luck, let's be generous and cut that in half. Take 13% over a 12 month span, you are looking at over 150% annualized return. That already smokes the market and your average furu. And for the kicker. Over the whole month, I averaged only 63.3% of my rolling capital in use. That is 25% locked in core shares and 31.3% in options strategy. I generated that 26.8% return with 36.7% of my capital sitting on the sidelines. So does chasing stocks that have run 600% make you money, yes, but so does investing in something not in a circle jerk. And it doesn’t have to be in speculative names under $10. I’m doing this with other names as well.

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