Leg 6 — Float Recycling (Reusable Capital Engine)

“Recycling the same dollar through sequential deep-ITM covered calls — converting valuation into cash flow, redeploying float, and letting even the smallest locked capital keep compounding.”

This leg shows how a single pool of capital can fund multiple trades back-to-back. Each deep-in-the-money LEAP call sale releases most cash instantly while a small residual amount remains locked, still producing double-digit yield on that micro-capital.

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Example Trades — Overall Sold Price & Gain on Low Locked Capital

Trade Buy (Cost Basis) Call Sold Effective Sold Price Gain vs Cost Retained Capital Gain Yield on Retained
MP Materials (MP) 100 × $72.32 = $7,232 Strike $2.50 | Premium $70.00/sh $72.50/sh (2.50 + 70.00) Gain $0.18/sh ($18) $250 7.2 %
NBIS 100 × $115.14 = $11,514 Strike $30.00 | Premium $90.00/sh $120.00/sh (30.00 + 90.00) Gain $4.86/sh ($486) $3,000 16.2 %
Bloom Energy (BE) 100 × $106.98 = $10,698 Strike $5.00 | Premium $102.70/sh $107.70/sh (5.00 + 102.70) Gain $0.72/sh ($72) $428 16.8 %

Average gain on retained capital ≈ 15.7 % across all positions — while 90–98 % of cash was released up front for redeployment and compounding.

Takeaway: Each trade sold effectively at or above market value. The released float funds new positions, and the small locked amount continues earning high percentage gains — a flywheel of capital reuse and compounding.

If the market corrects sharply — for example, if NBIS falls from $115 to $30 — your effective sale at $120 (strike $30 + premium $90) is already contractually secured. The $9,000 premium was received on day 1, and only about $3,000 of your own capital was at risk. The option would expire deep in-the-money, the position would close, and you’d retain both the extracted cash and the ability to redeploy it at far lower valuations. In downturns, the framework flips volatility into opportunity — releasing capital from overvalued names early and positioning you to buy the same businesses back at rational prices.
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Disclaimer: Educational illustration only; not investment advice. Options involve risk. Use with valuation discipline and risk controls.