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Hi, Andy Sirski here. This essay on options explains in great detail how we use the strategy we call selling covered calls. The idea was a little difficult to figure out, but once I did, it has helped me make thousands of dollars. Basically, I buy a stock or own shares and I sell what is called a covered call. This is like renting out land.
When we sell a covered call, we keep collecting the dividends, but we cannot put a stop loss on the stock. And once in a while the stock can go up more than the money we collect by selling the call.
Flow throughs are a legal way to reduce taxable income. Through the flow through system the government lets us lend money to mining and or drilling companies. Those companies in turn allocate an equal number of dollars to us which we claim as a deduction on line 224 of our personal tax return. Flow throughs can be deducted from any and all kinds of income and basically convert regular income into capital gain which is only half taxable.
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