“ How much capital do I need to do this?”

This is by far the most common question I receive from readers who fancy building a borderless income stream of their own by running a one-man hedge fund, as I have. The answer to such a question is inherently personal and therefore necessarily nuanced, but nuanced does not mean unknowable. So today I am going to do something slightly unusual for this publication and write the answer as a recipe: from ingredients to step-by-step method along with a dash of my personal notes. By the end you will have your own number, and you will understand why each input belongs in the dish.

What’s on the Menu?

Freedom, fast-tracked.

Serves: One, adjust expenses according to number of people.
Preparation time: one afternoon
Cooking time: Varies with the individual, but years rather than decades for most readers.

Ingredients:

• Your personal expenses - download all your bank statements and ask Claude et al. to calculate your monthly and annual expenditure (takes 5 mins).

• One honest assessment of your skill level in generating investment returns (this ingredient cannot be substituted)

• The formula: Freedom Number = Annual Expenses × Capital Multiple

• A capital ladder (supplied below)

• Optional: Re-location costs towards a more budget/tax friendly location

• Optional (but recommended) A subscription to this publication

Method

Step 1 — Clarify The Core expenses

It’s key to distinguish between core (non-negotiable) and discretionary spending. For example, I have recently spent a lot of money on a trip to Italy - including a private tour of the Vatican etc - and all sorts of cool-but-expensive things. Obviously these are not core expenses. The key question to answer is how much is the non-negotiable cost of living for you and your family?

The mid-range estimate for the median annual cost of living in the USA is ~$25,000 for a single person to ~$60,000 per family.

Step 2 — Run The Formula

Freedom Number = Annual Expenses × Capital Multiple.

If we take that figure to a generic financial advisor they would reflexively apply the 4% withdrawal rule which assumes that in order to retire, the average portfolio can spend up to 4% of their savings per year and fund a retirement of ~30 years before the capital is all spent.

To calculate the capital required for one’s annual expenses above to equal a withdrawal of 4% simply calculate expenses by 25:

$25,000 × 25 = $625,000 for our single person.
$60,000 × 25 = $1,500,000 for the family.

Sit with that for a moment, because these numbers are disheartening for most. They require decades of diligent saving, a bull market that cooperates, and a retirement that arrives roughly on schedule with your pension — assuming one’s government has not changed the rules by that time. Of course there’s nothing wrong with this per se, but for my taste it’s completely unacceptable. It’s worth explaining that this rule was based on the 60:40 portfolios of the ‘80s and is only slated to last 30 years — I am in my 30s and don’t want to wait 20-30 years to enjoy independence.

Now look again at the formula.

Freedom Number = Annual Expenses × Capital Multiple.

Two variables. The industry treats both as constants yet neither is fixed. The rest of this recipe is the pulling of two levers and the discovery that when you can effect both of them, the barrier between you and your freedom shrinks non-linearly!

Step 3 — Adjust Lever 1: Expenses

For geographically flexible individuals, your expense number is more malleable than you think. A similar lifestyle: food, housing, internet , school fees etc — is priced differently in Melbourne than it is in Medellín (although I don’t recommend either). Reprice the core from Step 1 in a jurisdiction chosen deliberately rather than inherited, and you often find that 40–60% typically falls away.

In other words, the $60,000 PA family life might become $30,000–35,000 PA with less loss of luxury than one might expect.

Side note: If you earn in a hard currency and spend in a softer one, every tick of exchange-rate drift lowers your hurdle without you lifting a finger. My book is denominated in US dollars; my expenses are not. Expenses in the weak currency, income in the strong one — never the reverse.

Step 4 — Pull lever 2: Increasing returns

Climbing the capital ladder. And this takes work.

Above, we applied the standard rule of multiplying expenditure by 25. But ask yourself, why 25? Because 4% is the yield of someone who has effectively agreed, in advance, to know nothing. It represents the lowest historically reliable yield of institutional capital: index funds with no room for judgment, nor selection. It is the capital requirement of assumed ignorance. Arithmetically, the moment you upgrade your skills to improve on a 4% withdrawal rate, the required multiple falls precipitously. Let’s examine how improving one’s capital returns and by extension, permissible withdrawal rate, can drastically lower the initial starting capital required.

Rung 2 of the capital ladder represents ownership of superior businesses with inflation-protected free cash flow yields: the exchanges and royalties so often mentions in my other publication.
Rung 3 is the basic operating system documented in this publication, which stands today at 23.5% over 6.5 months — of course this is no guarantee of future performance etc etc.

Rung 3 is the most individually variable hence it is imperative that the reader apply an honest estimation of the returns they are able to generate with their individual skill set.

Step 5 — Multiply both levers

This is where the magic can happen thanks to an old friend — leverage.

Let’s run a hypothetical by pulling both levers simultaneously: reducing expenses and climbing up the capital ladder.

Potentially then, perhaps not the same lifestyle, but similar is theoretically possible with 50-90% less capital. Notice what the two levers do when pulled together: they multiply rather than add. The central point here is that with some intelligent design and the adoption of new ideas, one’s life can shift from coping to thriving.

Chef’s Notes:

I began the year experimenting with $50,000 to seed Machina Capitalis and documenting the progress. Fairly quickly I was satisfied with the scalability of the project and determined that the optimal seed capital was ~$250,000 USD.
Why $250K? My personal expenses run about $45,000 US per year (ok you got me - I spend way too much, but it’s well covered by multiple income streams). I planned a range of ROIC (return on invested capital) of 18-30% ergo, calculating conservatively, the seed capital should be $45,000 ÷ 18% = $250,000.

In practice: I withdraw what I spend, not what I earn. The difference stays in the book as working capital — remember, this is an operating business not an investment portfolio. Once that surplus grows large enough, I move it across to my long-term portfolios. The fund pays for life; the long-term portfolios build wealth.

Important note: Taxes have been ignored here as each individual’s situation will differ, but none the less it should form part of year expense calculations.

All of this is less exotic than you might think - I merely suffer from exotic tastes!
An honest expense audit, a deliberately chosen location and a yield you can actually defend are the starting points. Run the recipe with your own figures this weekend and I suspect you will find what I found: freedom is not thirty years away. It is a design problem, and design problems have solutions.

I document mine in real time inside Machina Capitalis: every tactic, every trade and every month’s income — warts and all.

If you’d like to be a part of the group — subscribe today.

Subscribe now

Until next time,
Benjamin.

Disclaimer

Machina Capitalis is a personal publication produced for informational and educational purposes only. It documents the author’s own opinions, research, and trading activity. Nothing in it constitutes financial, investment, legal, tax, or accounting advice, nor a recommendation, offer, or solicitation to buy, sell, or hold any security, derivative, or other financial instrument.

The author is not a licensed financial adviser, broker, or registered investment professional, and no advisory or fiduciary relationship is created by your reading this publication or holding a subscription to it. Content is general in nature and does not account for your objectives, financial situation, or needs. Before acting on anything discussed here, conduct your own research and consult a licensed professional in your jurisdiction.

Options, margin, and short selling carry substantial risk and are not suitable for every investor. Strategies involving short options or inverse and leveraged instruments can result in losses that exceed the capital initially committed, in some cases without limit. Returns, yields, and annualized figures cited are specific to the author’s positions, timing, and account, are frequently illustrative or estimated, and should not be relied upon. Past performance — the author’s or anyone else’s — is not indicative of and offers no guarantee of future results.

The author holds, and actively trades, positions in many of the securities and instruments mentioned, and those positions may change at any time without notice. Statements about the author’s intended actions are not commitments and may not be acted upon. Prices, figures, and positions referenced were current only as of the time of writing and will have changed.

Information believed reliable at the time of publication may contain errors or omissions, and is not updated for subsequent developments. To the maximum extent permitted by law, the author accepts no liability for any loss arising from reliance on this material. You act on it entirely at your own risk.

This piece is a record of my own trading for educational and illustrative purposes. It is not financial advice, not a recommendation, and not a solicitation to buy or sell any security. I hold the Abacus position described, and I may add to it, reduce it, roll it, or close it at any time without notice. Nothing here accounts for your circumstances, goals, or risk tolerance.

Options carry substantial risk and are not suitable for every investor. A covered call caps your upside and does not protect against loss below your net cost basis; writing calls against shares you do not own is a different and far riskier proposition that I am not describing here. Averaging down into a falling position can compound losses as easily as it lowers a cost basis. You can lose money — including more than you expect — trading these structures.

All prices, figures, and probabilities are as at the dates stated and will have changed by the time you read this. I am a private investor sharing my own process, not a licensed adviser. Do your own work, and consult a licensed financial professional who knows your situation before acting on anything you read here.

That system is the intellectual foundation of Machina Capitalis. I’ve adapted it to the modern options market, and in today’s video I show you the backbone of it: the deep-in-the-money buy-write, structured not for the yield-chasing you’ve seen a hundred times on YouTube, but for a locked-in spread with a downside cushion large enough to survive a market event.

The distinction matters, so let me be blunt about it. The popular version of the covered call: buy a stock you like, sell an out-of-the-money call “for income”, is a contradiction. It’s investing with the upside amputated. This is not that.

In my basic system the profit is calculated and locked at entry, the strike sits deep in the money, and assignment is a good outcome. If the profit calculator says no positive profit exists, the trade does not exist. Premium is the point; direction is someone else’s problem.

In the video I walk through a live example. Gold Royalty Corp (GROY) at a spot of $2.88, selling the June 2027 $2.50 call, for a break-even of $1.46. That is a 49% downside cushion. The stock can nearly halve before the position loses a dollar compared to a 71% return to expiry if assigned. Finding set-ups like that is most of the work.

And because nobody should show only the trades that worked, that’s not what I do here in Machina, I also walk through one that went against me. My CME campaign entered on the 1st of April and promptly sank underwater. What followed is the actual product of this publication: ten weeks of selling calls against the position, banking $2,103 in premium — 7.4% of the position’s cost — and grinding the break-even down from $284 to $263. The position is repaired by cash flow, not by hope. That is what management looks like, and it’s the part that seperates a pro from a schmo.

For premium members, the video continues into the full live book: the short path-dependent ETF overlay, the hedge decisions I made this week on QQQ, SPY and VIX, the ongoing TPL poor man’s covered call campaign — including some management I had to do to handle the trade’s volatility and my exact entry workflow from calculator to fill. In the next piece I’ll answer the question this entire project exists to answer: how much capital do you actually need to live off your capital alone?

At an 8% return versus a 25% one. The difference is not incremental. It changes what’s possible.

Machina Capitalis is educational documentation, not financial advice. Options involve significant risk of loss and are not suitable for all investors. Real positions are shown for transparency, not replication. Past performance is no guarantee of future results. Do your own research and consult a licensed adviser.

Read more

I’m proud to be partnering with The Solstice Laboratory — At the cutting edge of Econo-physics.

Ray Dalio’s recent piece “Why I Recommend Being a Macro Long-Short Investor” caught my attention.

I liked the piece and, as much as I believe there’s way too much noise around “Macro” in the financial media, I can’t deny its importance on market capital flows and, by extension, my capital allocation.

Going long-short sounds simple and it does make sense, however it is difficult to apply practically for most individual investors. The reason being: it generally still involves essentially picking winners, only here the idea is applied relatively across companies, assets, sectors or even nations.

For instance: a popular trade idea over the last year has been long Brazil / short US stocks.

The trade performed well up until April, with EWZ up ~51% vs SPX ~16.5% for a net profit of 36% for a long-short trader.

Unfortunately however, the YTD performance now has reversed completely with a net performance of −2%.

Long-short Macro ergo isn’t really applicable to long-term investing for the mere mortals, as overstaying one’s welcome — even by only 2 months here — ended in a loss.

Traditionally, hedge funds targeted sector-specific long-short trades, being long the best in class + short the rest, or weaker companies. An example might include long WPM and short the GDX in the gold sector. Over a long-enough time horizon this particular trade has done well, and provided risk-adjusted outperformance during most gold markets, including Bear & Flat — highlighting the difference in underlying models.

Yet again, here a long-short investor needs to manage their timing, selection and leverage (Many hedge funds use copious leverage which is why they blew up all the time) because over the prior 12 months the quality has underperformed the broad index inside the very same sector by ~20%

This type of pair-trading or arbitrage is typical of long-short, and is why hedge funds were originally known as arbitrageurs.

So what if there was a way to utilise the power of long-short to achieve outsize risk-adjusted returns by going long-short on the same asset?

Enter Ed Thorp and the concept of warrant-hedging which I’ve adapted to call options.

The great Ed Thorp is one of my investing heroes and is a pioneer in quantitative finance — arriving on the scene well before Jim Simons et al — and is considered by many to be the true inventor of options pricing, formula known as the Black-Scholes formula. Ed released his work to Fischer Black and Myron Scholes (after having cleaned up in the derivatives markets for a few years prior).

The idea was to trade instruments on the same stock or asset in such a way to become market-neutral i.e. completely directionally agnostic as to price movement in the underlying and instead benefit from mis-pricing of the derivatives on the asset.

How well did this work? See for yourself.

This type of model has been on my mind a lot recently as today’s stock market volatility & geopolitical setup matches the ‘70s in many ways.

Given Machina Capitalis is a business for me — you might say it’s a 1-man hedge fund — the idea of making 20–30% annualized whilst significantly stripping directional price risk is highly attractive, and will more than suffice for my income needs without requiring a large amount of working capital.

How does it work — The Big Idea

Simple. Ed used a basic system where he went long common stock and sold short convertible securities such as warrants that were overpriced.

He calculated the correct hedging ratio such that a net profit was expected by the expiration date of the warrants whether the price went up, down or sideways.

I’ve adapted this system here in by shorting call options to hedge in profits and/or significantly reduce the downside. Before you dismiss this as ‘just writing covered calls’ there are a few nuances to consider.

Factors such as: the strike placement of the short call, the ratio of long stock : short calls and how this can be adjusted over the life of the trade are — to my knowledge — available nowhere else.

Enough theory — let’s examine a real example of a trade I’m running right now.

Hedged Trade: Abacus Global Management (ABX)

My book will not be run completely delta-neutral like Thorp’s was — meaning I’ll always have some exposure skewed directionally. This is because I don’t want to increase the management needs operationally — I want minimal running requirements + acceptable returns with significant downside protection. My edge is to stick to quality assets I know well; in addition to the quantitative factors, this should provide adequate risk-adjusted returns and so far has done so.

One tool I use frequently to get the best of all worlds is the deep-in-the-money covered call, meaning I buy an asset I like at a discount by simultaneously selling an ITM call option at a ratio of 1:1 (100 common = 1 call option).

ABX was trading at $8.98. I hold a positive long-term view on the stock as discussed with but want to hedge my downside here.

Therefore I executed a buy-write — buying 100 shares + selling 1 call option which expires in Jan ‘27. The trade looks as follows — my first tranche was to trade 15 lots.

The Hedge That Pays Me to Wait

Thorp and Kassouf considered a call option a short-term warrant. Sell one in the money against stock you own, and the basic system reappears — long the common, short the warrant, with a margin built in before the market moves at all. Effectively here’s what happened:

I paid $6.51 for a stock that redeems at $7.50. The ninety-nine-cent spread is locked in the day I put it on. 27.5% downside protection and a 24.8% annualized return on capital is guaranteed if ABX stays above $7.50 which has a probability of 77.2%. If I were so inclined, I could set, forget and check in in January. It pays to keep things simple.

Now let’s walk it through the potential outcomes.

Stock price falls below strike. This is the case the structure was designed for. From $8.98 down to $7.50 — a 16.5% decline — I still collect the full $99; the hedge has not even broken a sweat. Below $7.50 the call expires worthless and I am left holding the common, but at an effective $6.51, so I keep making money until $6.51 and only begin to bleed below there. And even then I am $247 better off at every price than the man who simply bought the stock unhedged. At $6.00 he is down $298; I am down $51. The premium is a constant $2.47-per-share head start that never leaves me.

Stock stays in range. Abacus sits at $8.76 today, already above my strike. If it simply refuses to move — drifts, churns, bores everyone — I am called away at $7.50 and book the full $99. This is the quiet feature of the in-the-money write: inertia is a winning outcome. I do not need the company to do anything. I need it not to collapse, and the market gives me that better than three times in four.

Stock rises more than 11%. Here is the opportunity cost. Everything above $7.50 belongs to the man on the other side of my call. So if Abacus climbs, my gain stops at $99 while the unhedged holder keeps going. The break-even between us is $9.97: below that I do at least as well as he does, above it he pulls ahead. To clear $9.97, Abacus has to rally 11% from where I bought in 6 months or so.

Of course it should be noted that I can always add to either the long or short side depending on price movement. Given call options tend towards zero as expiry approaches, I can adjust my ratio in a price slump by selling more calls at a higher price and buying more shares at a lower price and vice versa.

Adjusting the Ratio

Ed Thorp never held a hedge still. The heart of the basic system was a ratio — so many shares long against so many warrants short — and the ratio was not a number he set once. It was a dial he turned as the stock moved, and the turning itself was where a good part of the money came from. He computed the ratio from the slope of his warrant-stock curve: how much the warrant moved for a dollar move in the common. We have a shorter word for that slope today. We call it delta. Ed was delta-hedging warrants by hand a decade before Black and Scholes gave the number its name.

A covered call has a mix too, and the first thing to understand is that it breathes on its own. My short call’s delta is the slope; my hundred shares are a fixed +100. The net of the two is the position’s true long exposure. I don’t have to adjust it, I can remain fully covered and relax, yet at times it may be worth adjusting.

Delta Table

As Abacus falls, my short call loses its delta, the hedge quietly lets go, and my P/L sensitivity gets longer and longer the common — not because I did anything, but because that is what a call's slope does as it goes out of the money. Most covered-call writers experience this as a problem as they are often stuck in the trade before they can re-write at the moeny, a more experienced trader might simply adjust the mix.

The down-ladder: changing the mix toward the long side.

When the stock falls through my strike, I do two things at once, and they are the same two things Ed did. I add to the long — buy more common at the lower price — and I re-arm the short by rolling (buying the original call now cheaper and re-selling) the call down to a lower strike, where its delta is high again and its premium is fat again. Each new hundred shares funds exactly one more covered call, so I am writing more calls as I descend, but never more than my shares cover.

What the ladder buys me, rung by rung is a lower blended cost basis and a hedge re-established at the new level instead of a dead one stranded up at $7.50. The breakeven walks down the price chart with me.

The up case is the easy one. If Abacus rises instead, the call’s delta climbs back toward 1, my net delta collapses toward zero, and the position caps itself — fully hedged at the top, exactly as designed.

Once again, I never allow my shorts to outnumber my longs, which would leave me exposed to a theoretically infinite loss in the event of a strong rally in the stock price.

I decide before I ever descend how many rungs I will fund and how large each may be, so that a continued decline depletes a planned allocation and never the entire book.

See my piece on the Kelly criterion.

Access My Entire Playbook

This is one position. Behind it sit several more using the same tactic and more still using more advanced tools

My method is portable by design. What I am building is a one-man hedge fund — borderless, digital, run from a laptop and a connection, owing nothing to a postcode. The same structure that pays me to wait on Abacus pays me from Mendoza or a café in Bologna, just as readily as from a desk in Melbourne. The income has no address. That is the freedom the system is actually for.

Premium members get the rest of it: every trade broken down the way this one was, the book updated live as I move it — each roll, each rung, each adjustment as it happens — and chat access to ask me directly. If today’s piece was useful to you, consider joining. And if nothing else, please like and share it — it’s the single biggest help in getting this work in front of the people who’d value it.

I’m leaning towards these ‘hands-off’ trades with 6-12 months expiry more and more recently - leaves more time to read, write and explore places like Puyehue, Chile in the above photo.

Next time I’ll be examining another popular options tactic— selling put options— and providing a post-mortem on some of my most recent, real-life trades.

Until then — all the best!

Benjamin.

Disclaimer

Machina Capitalis is a personal publication produced for informational and educational purposes only. It documents the author’s own opinions, research, and trading activity. Nothing in it constitutes financial, investment, legal, tax, or accounting advice, nor a recommendation, offer, or solicitation to buy, sell, or hold any security, derivative, or other financial instrument.

The author is not a licensed financial adviser, broker, or registered investment professional, and no advisory or fiduciary relationship is created by your reading this publication or holding a subscription to it. Content is general in nature and does not account for your objectives, financial situation, or needs. Before acting on anything discussed here, conduct your own research and consult a licensed professional in your jurisdiction.

Options, margin, and short selling carry substantial risk and are not suitable for every investor. Strategies involving short options or inverse and leveraged instruments can result in losses that exceed the capital initially committed, in some cases without limit. Returns, yields, and annualized figures cited are specific to the author’s positions, timing, and account, are frequently illustrative or estimated, and should not be relied upon. Past performance — the author’s or anyone else’s — is not indicative of and offers no guarantee of future results.

The author holds, and actively trades, positions in many of the securities and instruments mentioned, and those positions may change at any time without notice. Statements about the author’s intended actions are not commitments and may not be acted upon. Prices, figures, and positions referenced were current only as of the time of writing and will have changed.

Information believed reliable at the time of publication may contain errors or omissions, and is not updated for subsequent developments. To the maximum extent permitted by law, the author accepts no liability for any loss arising from reliance on this material. You act on it entirely at your own risk.

This piece is a record of my own trading for educational and illustrative purposes. It is not financial advice, not a recommendation, and not a solicitation to buy or sell any security. I hold the Abacus position described, and I may add to it, reduce it, roll it, or close it at any time without notice. Nothing here accounts for your circumstances, goals, or risk tolerance.

Options carry substantial risk and are not suitable for every investor. A covered call caps your upside and does not protect against loss below your net cost basis; writing calls against shares you do not own is a different and far riskier proposition that I am not describing here. Averaging down into a falling position can compound losses as easily as it lowers a cost basis. You can lose money — including more than you expect — trading these structures.

All prices, figures, and probabilities are as at the dates stated and will have changed by the time you read this. I am a private investor sharing my own process, not a licensed adviser. Do your own work, and consult a licensed financial professional who knows your situation before acting on anything you read here.

He’s not a large man. He’s not particularly strong. But he’s just made an extremely bold claim that stops people mid-conversation: give him a lever long enough and a fulcrum to place it on, and he could move the Earth itself.

Not with more muscle. Not with more effort. With better structure.

The fine folk of Siracusa no doubt laughed. Engineers rarely get the last laugh in their own lifetime, but the principle he was describing has quietly underpinned every meaningful advance in mechanics, architecture, and even capital markets, ever since.

Leverage isn’t about force. It’s about physics. It’s about arranging things so that modest input produces outsized output — not by taking on more risk, not by borrowing against tomorrow, but by finding the fulcrum that changes what’s possible with what you already have.

That’s the idea I want to introduce today. And I want to introduce it through a strategy that most investors never encounter — not because it’s obscure or complicated, but because it sits quietly in the options world, while most people are busy staring at price charts and macro forecasts.

It’s called the Poor Man’s Covered Call (PMCC)

The name is unfortunate. The returns are not.

First, The Machine It Improves On

To appreciate improvement you need to understand the original.

A covered call is one of the most straightforward income strategies in markets. You buy 100 shares of a company. You sell someone else the right to buy those shares from you at a higher price (a call option) and they pay you a premium for that right. If the stock never reaches that price by expiry, the option dies worthless, you keep the premium, and you do it again next week/month/year etc. If the stock does get called away, you sell at a price you agreed to in advance which is still profitable, just capped.

Simple and effective when done right.

However, the main drawback of the covered call is that it can require a lot of working capital, especially for many of the assets that I know and love.

Consider that running a covered call on CME Group right now with the stock sitting at $303 means owning 100 shares at $303 each. So over $30,000, locked in a single position producing perhaps $300–400 a month in premium income.

*The 30 day ATM call on CME is $3.53 mid-bid/ask at time of writing

That’s decent yield. But it’s being extracted from an enormous base, with $30,000 stuck and working at roughly 1% per month. And given CME pays only a modest dividend of ~3.5% the returns from yield alone might not be worth the management time.

For decades the covered call was the tool of choice for many (it still is).

Then options markets matured. And someone with an eye for leverage found the fulcrum.

The Lever

Here’s the insight at the heart of the PMCC, stated plainly:

A deep in-the-money call option with a long expiry behaves almost identically to owning the shares — at a fraction of the cost.

When I buy a deep in-the-money call option with a long expiry, it behaves almost identically to owning the shares but I’m spending a fraction of the cost.

When I position a call option deep enough in the money, it moves nearly dollar-for-dollar with the underlying stock. It tracks price closely because there’s less extrinsic, or time value in it. It carries the same directional exposure and — this is the critical part — I can sell short-dated calls against it, exactly as I would if I held the shares outright.

So instead of spending $30,000 on 100 shares, I spend a fraction of that on a LEAP (Long-term Equity Anticipation Security), essentially a long-dated call option, and use that as my foundation. Then each cycle, I sell a short-dated call against it, collecting the premium or selling for capital gains in the event of assignment and repeat.

The structure I use, distilled:

I buy a deep in-the-money call expiring 12–24 months out. This becomes my synthetic stock position — my lever.

I sell a short-dated out-of-the-money call against it each cycle. This is my rent.

Collect. Reset. Repeat.

No borrowed money. No margin calls. My maximum possible loss is defined the moment I enter being the price I paid for the long call. What I’ve built is a replacement for share ownership using pure structure, with my capital requirement slashed and the fulcrum placed exactly where Archimedes would have wanted it.

The Trades — Real Positions.

This is where it stops being theory.

What follows are some live positions from my own portfolio. Trades I’m actively running and sharing with Machina Capitalis premium members each cycle. The numbers aren’t hypothetical. They’re what the machine is actually producing right now.

CME Group — The Aggressive Configuration

CME is a business I understand and respect: it earns revenue every time a derivative contract changes hands, regardless of market direction. When volatility rises, its income rises. It’s a toll road on financial uncertainty which makes it an excellent foundation for a systematic income strategy IMHO.

The stock is trading at $303 and I have just notified premium members of the trade I entered:

Long: January 2027 $200 call = $10,340

Short: FEB 27 2026 $305 call ~$310 premium collected

Total capital deployed: $10,340 Compared to the $30,300 the share-based equivalent demands today.

The short call sits roughly 9% above the current price (out of the money), giving the stock room to move while the premium lands in the account.

If the short call expires worthless, $310 is collected. That’s 3.0% return on capital in a single week.

The long call remains intact. The position resets. The machine runs again next month.

If CME rallies through $305 and assignment occurs, the spread closesAt expiry, a CME close at or above $305 implies a capped payoff of roughly $1,150 before costs, based on the structure’s defined spread.

Personally I love using this setup.

Estimated returns shown are payoff-diagram projections based on specific expiry assumptions; actual results will vary materially depending on price path, volatility, timing of exit, and execution.

ICE — The Patient Rent Engine

Intercontinental Exchange is trading at $154 today. Yesterday I entered the following trade:

Long: January 2027 $125 call ~$3,710

Short: March 20 2026 $160 call ~$181 premium collected

The short call sits approximately 7% above the current price. The wide gap between the long and short strikes makes assignment unlikely by design. This isn’t a position built to close, it’s built to run. To collect rent on a long-dated asset while that asset quietly compounds in the background.

The result so far: $181 collected, approximately 4.9% return on capital over a 60-day cycle.

Long call intact. Next short sold in April if the March contract expires worthless.

What These Numbers Suggest

A brief pause is warranted here, because these figures deserve honest framing.

Annualized returns of the likes above are not a promise. No strategy produces clockwork results across every market condition, and anyone presenting options income as guaranteed yield is someone to walk away from. The numbers are shown purely to illustrate the capital efficiency of one tactic vs the other.

The traditional CME covered call locks up $30,300 today. This PMCC locks up $10,340. That $20,000 difference doesn’t disappear it remains available, if I so choose, for more trades or investment positions.

Over time, systematic reallocation and repeatable income collection can materially influence results, particularly when applied consistently across multiple market cycles. This approach depends less on prediction and more on structure, patience, and disciplined execution.

A Final Thought

Archimedes never actually moved the Earth. But he understood something that most people in his time didn’t: that the question was never about strength. It was always about position. Find the right fulcrum, apply the lever correctly, and physics does the rest.

That’s what Machina Capitalis is built around. Not predictions. Not hot tips. Not the exhausting performance of appearing to know what markets will do next week.

My machine designed carefully and run consistently, emphasising structured income processes and disciplined execution over market prediction.

The two positions above are live as of February 20th, 2026. The premium members who follow these trades saw the setups before the trades were placed: from the entry logic, the strike selection to the management plan, and the exit criteria. Every cycle, they see the next ones.

The two positions above were live as of February 20th, 2026, with premium members able to follow the full decision process in advance — from structure selection through to management and exit planning.

If this framework has prompted you to consider how repeatable option structures can influence income and capital allocation over time, that line of inquiry is worth exploring to see whether it may be appropriate for you.

The lever exists. The fulcrum is here.

The premium tier is where we place it together.

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Disclaimer: This article is provided for general information and educational purposes only and does not constitute financial advice. Options involve risk and may not be suitable for all investors. Examples shown are from a real portfolio and are not recommendations. Readers should consider their own circumstances and conduct independent research before making any investment decisions.

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