Use this strategy to build your wealth in the stock market
When most people think about Warren Buffett’s investing strategy, they think of buy and hold. Pick great companies and hold onto them forever.
While Buffett does have a reputation for holding onto companies for many years, that’s not the only way he’s built up his wealth.
Warren Buffett trades options from time to time to collect premiums while waiting for stocks he loves to hit certain price points.
Rather than buying options, Buffett sells options. Selling options turns you into the casino rather than the gambler.
When selling options, you have two choices: the covered call and the cash secured put. For a covered call, you already own 100 shares of the stock. You can sell a call and collect premium just for the stock sitting in your account.
If you sell a call for stock XYZ with a strike price of 50, you are only obligated to sell your 100 shares of XYZ stock if XYZ stock breaks past $100/share. However, if the stock stays under $100/share, you keep all of your shares and the premium.
