🔄 Make Your Own Machine 8: How to Reinvest Premiums to Grow Your Share Count
Alright — by now you’ve:
- Bought a stock
- Sold a covered call
- Collected your first premium (🎉)
- Maybe even had shares called away and lived to tell the tale
Now it’s time to unlock the power move of this whole FIRE Engine strategy:
Use the premium to buy more shares… so you can sell even more calls… and make even more premium.
This is how you go from making $15 a week to $150+ a week — without ever adding more of your own money.
🔁 The FIRE Engine Loop
Let’s simplify this with a visual loop:
Buy 100 shares → Sell a call → Collect premium → Reinvest → Repeat
Every time you complete the loop, your income potential goes up.
Let’s break it down with clean numbers.
💵 Example: Starting With 100 Shares of RUM
- You own 100 shares of RUM at $7.50 = $750 investment
- You sell 1 covered call and earn $15 per week
- That’s $60/month
After about 12–13 weeks, guess what?
You’ve earned enough to buy 10 more shares.
Fast-forward a few months and boom — you’ve stacked up to 200 shares
Now you can sell 2 calls per week instead of 1.
$15 x 2 = $30/week → $120/month
Wait a few more months? Now you’re at 300 shares.
This is how the engine builds steam.
📈 Reinvestment = Snowball
Let’s say you’re consistent — you sell calls every week and never withdraw the premiums.
What happens?
| Share Count | Calls You Can Sell | Est. Weekly Premium |
|---|---|---|
| 100 | 1 | $15 |
| 200 | 2 | $30 |
| 300 | 3 | $45 |
| 400 | 4 | $60 |
Within a year, you can go from $15/week to $60/week or more, just by recycling premium.
And you never had to put in more capital after the first $750–$1,000.
🪙 “But What If I Only Earn $10 a Week?”
Even $10 a week is $520/year — that’s 70 more shares of a $7.50 stock. That’s almost enough to add another contract just from reinvestment.
Remember: the FIRE Engine isn’t about flashy, overnight results. It’s about consistent, compounding income.
And once your share count grows, it feeds itself.
🧠 Bottom Line
Don’t spend your premium — stack it.
Every dollar you reinvest is another step toward your next contract.
Every contract is another stream of weekly income.
This is how your engine turns into a machine.
👉 Up Next: [Post 9: How to Roll a Covered Call (And Why You Might Want To)]
Want to see how my own share count is growing? Check out the FIRE Engine blog.