The Two Week Time Frame

I mentioned something yesterday that I would like to explain a bit more here.
It's the notion that making 20% in two weeks is better than 40% in four weeks (or one month).

Mathematically, the formula for calculating compound interest at a specified rate and time frame is:

where

P = principal amount (the initial amount you borrow or deposit)

r  = annual rate of interest (as a decimal)

t  = number of years the amount is deposited or borrowed for.

A = amount of money accumulated after n years, including interest.

n  =  number of times the interest is compounded per year 

Yes. I copied that from the first page of googling "compound interest formula"

So. In our case for the sake of illustrating the point, we'll put 1 as the principal amount. 

The rate we want to achieve in the two week time frame is 20%. Converted to a decimal that's 0.20

For simplicity's sake we'll go with 1 year for t

Since it's being reinvested (compounded) every two weeks throughout the year that's 26 for n.

Plug and chug simplified it becomes 1.2^26, which equals about 114.5

The same thing for the four week time frame with a 40% rate means 13 for n and 0.40 for r.

Plug and chug simplifies it to 1.4^13, which equals 79.4

What this means is that if everything goes EXACTLY AS PLANNED (40% GAIN) and EVERY SINGLE PENNY is REINVESTED EVERY FOUR WEEKS, your initial amount invested will be MULTIPLIED BY 79 by the year's end.

And if everything goes EXACTLY AS PLANNED (20% GAIN) and EVERY SINGLE PENNY is REINVESTED EVERY TWO WEEKS, your initial amount invested will be MULTIPLIED BY 114 by the year's end. 

That's a SIGNIFICANT DIFFERENCE.

If we reduce the time frame to just the first four weeks (meaning n is 2 for the two week time frame), the results are 1.44 versus 1.4. This still shows that a two week frame at 20% is better than four weeks at 40%.

Now that I've bored you with all that math, let me show you what happened today.

If you remember, the combined MU and VZ call cost $283.96. I sold the MU call today for $0.10 as you can see and the VZ call for $3.00. This means that $283.96 turned into $597.98 (a gain of 110%).

After the sale, I bought new options. The AAPL Aug 16 97.14 call @ $2.31and two AA Aug 16 16.00 calls @ 1.15 for a total cost of $472.99. Yes, I saved some cash from the gain this time around. The aim is to turn that into $567.59 in two weeks.

Here's what the account looks like after the market closed today:

I've gone from an account value of $319.74 two weeks ago to $620.49 today.
Obviously things turned out better than expected but it's just proof of the potential behind this system.
I'll continue to aim for modest gains (20% in two weeks) but will accept whatever gain comes.
I'll be occupied till Friday, so till then, have a wonderful week!!!