I was confused at first, as it seemed like he was pulling magic numbers out of the air, but I worked out most of it, and thought others would be interested. An

I was confused at first, as it seemed like he was pulling magic numbers out of the air, but I worked out most of it, and thought others would be interested. And also to see if I mis-understood anything. I get that we start off with $100 mil with the "2 and 20". 2% annually for funds under management, and a 20 percent incentive fee for returns that exceed the 4% benchmark. And I think here, he uses part of the $100 mil to sell $0.10 options, which if you sell 110 mil $0.10 options, you make $11 mil. So far, you have $111 mil, as long as the event doesn't happen. So he uses $110mil of the $111mil to put into an investment guaranteed to give him 4% in one year and he uses the remaining $1 mil to spend on geeks. So after one year, he'd have $110 mil * 0.04 = $4.4 mil from interest. So far, all together he has $110 mil + $4.4 mil = $114.4 mil, and he spent $1 mil on geeks. If you count just money in fund, and not money spent, it's $115.4 mil ($114.4mil + $1mil) So all together, the return is $115.4 mil (total) - $100 mil (original money), which gives us the $15.4 mil, of which $1 mil is already spent on geeks. The $2 mil comes from the "2 and 20" mentioned before, which he gets 2% of the original $100 mil for management fees. Here, I'm guessing it's the remaining amount that exceeds the benchmark of 4% of $100 mil. So $15.4mil - (4% * $100 mil) = $11.4 mil. And he gets 20% of $11.4 mil = $2.28 mil. So in total, he earned $2mil + $2.28 mil, of which he spent $1 mil on geeks so $2mil + $2.28mil - $1mil ~= $3mil I can see why he says the fund manager's not doing anything. The extra $15.4 mil return that's paying the fund manager, geeks, and investors mostly comes from betting on sure thing for options to get $11 mil of the $15.4mil and a guaranteed $4.4 mil from treasure bills, mostly on the strength of having the $100 mil in the first place. "Making $110 from $100 is hard work. Making $110mil from $110 mil is inevitable"