Dear Members,

I want to share a brief update on our Capital Extraction Project and also clear up an important question many of you have raised about the returns you see on the dashboard.

The honest answer is no.

Those high percentages are heavily influenced by how capital extraction with profit is accounted for. When I sell long-dated, deep in-the-money covered calls expiring in 2028, the entire premium from those contracts shows up as profit today, even though the contracts run for several years. That pulls multi-year premium into this year’s numbers and temporarily boosts the percentage you see.

How the accounting works (MSTR example)

Here is a live example from the ledger:

On day 1, however, the full $10,599.35 premium is already sitting as cash in the account and shows as capital + profit in the ledger. That is what makes the current period’s percentage look so high, even though part of the economic outcome belongs to future years.

Tax timing advantage

One additional benefit of this structure is tax timing. In many tax systems (including the U.S.), the cash arrives today, but the taxable event on the option is generally recognized when the contract is closed, expires, or is assigned — not on the day the premium hits the account.

That means I can use the cash immediately for new opportunities, while the tax liability on that option trade is deferred until the contract actually ends. Of course, everyone’s tax situation is different, so this is not tax advice — please consult your own tax professional. But from a framework perspective, it’s another way the strategy helps cash flow and compounding without instantly increasing the tax bill.

How market corrections can add extra return

Another important feature: if a market correction happens during the life of the contract, it can actually increase the effective return.

Continuing with the MSTR example:

• I originally received $10,599.35 in premium for selling the $150 call.
• Imagine that sometime before 2028, MSTR trades below $150 and the option’s value drops sharply.
• If the call can then be bought back for, say, $1,000, I can close the contract.

In that scenario:

• Total premium received: $10,599.35
• Premium paid back to close: $1,000.00
• Net premium kept: about $9,599.35

At that point, my shares are free of the call. Economically, my effective stock cost is now roughly:

• Strike price: $150
• Plus about $10 per share given back to close the call (the $1,000)

So my effective cost is around $160, not the original $197+. If I can then sell my MSTR shares in the open market at $160 or higher, I’ve created a meaningful capital gain on top of the net option premium already locked in. The temporary market correction gave me the chance to:

1. Buy back the call cheaply,
2. Reset my position with a much lower effective cost basis, and
3. Potentially capture a second wave of profit on the shares themselves.

What I’m targeting going forward

My plan remains straightforward:

• For highly overvalued companies: use Capital Extraction With Profit (long-dated, deep ITM covered calls) to pull forward capital + profit safely.
• For undervalued companies: use cash-secured puts. If shares are assigned, I will then write covered calls on those positions.

Across both approaches, my realistic target is about 14–20% per year over time, not 50–60% every year. The big picture is simple:

• Capital + profit in the form of premium is credited today.
• How I deploy that released capital over the next several years determines the true outcome.

Thank you, as always, for following this journey and for asking the kinds of questions that keep the framework clear, disciplined, and transparent.

Warm regards,
Manan (11/15/2025)