1. CFO STRATEGIES INC OPTION STRATEGIES 2009

2. What is an Option

A security that represents the right

But not the obligation

To buy the underlying security (shares)

At a specified price

Within a specified period of time

Each call represents 100 shares

3. Types of Options

Buy a call option - expect price to increase

Sell a call option reduce net cost

Buy a put option expect price to decline

Sell a put option desire to buy lower

Implement a spread option strategy

4. Risk Factor

Options can be less risky than stocks

They require a smaller investment

They can be self correcting

The profit potential is exceptional

It forces to you to take profits

5. Covered Calls

You buy the actual shares

Sell a call option against shares

The buyer then has the right to purchase

At a specific strike price

At a specific expiration date

This lowers your net cost of the shares

6. At Expiration

If stock closes at or above the strike price

The stock is automatically sold at strike

If stock closes below strike price

Sell another call to lower price or

Sell stock

7. Model Returns

• • If Called If Expire

1 Month 6.0% 5.0%

2 Months 8.0% 6.0%

3 Months 10.0% 8.0%

4 Months 11.0% 9.0%

5 Months 13.0%10.0%

6 Months 15.0%12.0%

8. Example 1 Covered Call Option Called Chicos FAS

Mar 17 Buy 1000 shs @ $4.89$4,890

Sell 10 Apr call $5.00 strike .45(450)

Net cost $4,450

Apr 17 shares called $5,000

Profit in 30 days $555

Percentage profit 30 days 12.4%

9. Example 2 Covered Call Option Expires Dryships Inc.

Dec 9 Buy 1000 shs @ $9.58$9,580

Sell 10 Mar call $7.50 strike 4.50(4,500)

Net cost $5,080

Mar 20 Sell 10 Apr $5 call .95(950)

New net cost $4,130

Option called sell @ $5 $5,000

Profit in 4 months $870 17.1%

10. Example 3 Covered Call Repeat Las Vegas Sands

April 7 Buy 1000 shs @ $ 3.90$ 3,900

Sell 10 May $5.00 calls @ $ .55( 550)

Net Cost $ 3,350

May 11 shares called 5 ,000

Profit in 34 days$1,650

Return 49%

11. Example 3 Covered Call Cont Repeat Las Vegas Sands

May 11 Buy 1000 shrs @$10.80 $10,800

Sell 10 Sept $11 Calls @ $3.00 (3,000 )

Net Cost 7 ,800

Ave Cost/share (28% disc) $7.80

Potential Profit $3 ,200

This Trade 41%

Potential Compound Profit 5 Mos 110%

12. Example 4 - Option Spread Freeport McMoran

Buy 1000 shs @ $30.00 $30,000

Buy 10 Jan11 30 call9.10$9,100

Sell 10 Jan11 50 call 4.30 ( 4,300)

Net Cost $4,800

If stock reaches $50 Profit $20,000

Percentage Return 2 yrs317%

13. Selling Naked Puts Option Expires Worthless

Dec 1/08 Fluor Corp. $32.75

Sell 10 Apr 30 puts @ $3.50$ 3,500

Apr 17 Puts expire worthless0

Profit in 4 months $3,500

Margin required @ 30%$ 9,000

Profit on Margin requirement 38.9%

14. Conclusion

Options are safer than stocks

Options require lower investments

Lower investment reduces risk exposure

Options provide higher potential returns

Covered calls are RRSP eligible

15.

Thank you for your attention

Contact CFO Strategies Inc.

David Saxe Investment Strategist

613-563-1085

[email_address]