In one day Warren Buffet's $5 billion investment in the Bank of America increased to $6 billion. An idea that came to him while he was taking a bath, and the deal was done within 24 hours.  Imagine what it will make him over the next 5, 10, 15 years?

Warren Edward Buffett, born August 30, 1930, is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett", he is the primary shareholder, chairman and CEO of Berkshire Hathaway.  He is consistently ranked among the world's wealthiest people. He was ranked as the world's wealthiest person in 2008 and is the third wealthiest person in the world as of 2011.

Buffett is called the "Oracle of Omaha" or the "Sage of Omaha" and is noted for his adherence to the value investing philosophy and for his personal frugality despite his immense wealth.  Buffett is also a notable philanthropist, having pledged to give away 99 percent of his fortune to philanthropic causes, primarily via the Gates Foundation. He also serves as a member of the board of trustees at Grinnell College.

           Source: Wikipedia

So how does the world's most successful investor do it?  Warren Buffet buys companies that he believes will appreciate over time. The last time he invested $5 Billion into a company (Goldman Sachs), the shares doubled in price within 12 months. Many investors became excited with the news of his investment last week.

Just one of the strategies Warren Buffet employs is renting out his shares with an option to sell at the price he sets. So how can you grow your investments like Warren Buffet?

We buy stocks on the market on the belief that they will increase in price, in order to make a profit. Sometimes this can take months and even years to rise in price. So while you are waiting, why not rent them out to make a monthly income?

If you’ve been a landlord you will understand using this strategy in the stock market. Imagine being able to buy a house for $8,000 and rent it out for $500 a month.

Let me give you an example. Let's say the stock is called XYZ, and it is just under $8.00 a share, say $7.80.

The rental premium you can get is approximately $0.50c. Let's say you rent it out for $8.00 for the month ahead. You calculate you can buy 1000 shares of XYZ ($7,800 total) and sell the premium, and receive 1,000 x $0.50. That is $500.00 into the bank account for that month, deposited immediately!
You accept that if XYZ goes up in price by the end of the month, and if it's above the $8.00 price, then the shares will be sold for $8.00.

But you realise this in advance, and are prepared for it. You will make not only the $0.50 but also $0.20 extra profit: $7.80 buy price - $8.00 sell price = $0.20 profit.

Plus the 0.50c or $500 Total = $0.70x 1000 = $700 profit. Almost a 10% return for the month.
If the share price rises above the $8.00 and you have decided you don’t want them to be sold and you would like to keep them, you can buy back the option sold and resell a future month.

If the share price is below $8.00 you will get to still own them and now be able to rent them out again for another month.

The buy-and-hold strategy certainly has a place in just about any individual’s investment portfolio. If, however, you are looking for a way to turbo-charge your profits while protecting against decreases in the price of your stocks, writing covered calls may turn out to be just the technique you have been searching for.

StockCourse recently ran an in-depth webinar on their “Covered Call Advanced Strategy Workshop”.  This webinar was recorded and is available for download.  If you would like further information please email contact@stockcourse.net.

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