1. CFO STRATEGIES INC OPTIONS 101 JULY 28, 2010

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. The Options Quadrant

Buy a Call

You expect the underlying stock price to increase in value, you can buy a call option, giving you the right to purchase the shares at a price anticipated to be below the market price on or before the expiration date.This will be a net debit to your account.

4. The Options Quadrant

Sell (Write) a Call

You expect the underlying stock price to increase in value and you are prepared to sell shares at a predetermined price on or before the expiration date.You will earn cash by selling a call which results in a net credit to your account.DO NOT SELL NAKED CALLS

5. The Options Quadrant

Buy a Put

You expect the underlying stock price to decline in value, you can buy a put option to sell the shares at a predetermined price, anticipated to be above the then market price on or before the expiration date.This will result in a net debit to your account.

6. The Options Quadrant

Sell (Write) a Put

You expect the underlying stock price to increase in value, you can sell a put at a lower price in anticipation of the put option expiring worthless.You will earn cash by selling a put, which results in a net credit to your account.Margin or cash reserve of about 30% will be required.If the stock price declines to the strike price, you will be required to purchase the shares at the reduced price.

7. 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 or

-- expect price to increase

Implement a spread option strategy

Multiple leg options

8. 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

9. Caterpillar July 23, 2010 10. Why Options???

Lets Look at Caterpillar (CAT-N)

Buy 100 shares @ $70.00 =$7,000 risk

OR

Buy 1 C Sep $70 @ $3.10 =$310 risk

If by Sep 17 CAT @ $75

Option could be worth $5.00 =$500

Profit$190

%Return 61%

11. Amazon July 23, 2010 12. Why Options???

Lets Look at Amazon (amzn-Q)

Sell 100 shares short @ $119.00 = unlimited

• • • • risk

OR

Buy 1 P Jan $120 @ $12.45 =$ 1,245 risk

If by Jan 21, 2011 AMZN @ $100

Option could be worth $20.00 =$2,000

Profit $755

%Return 57%

13. WAYS TO REDUCE COST

Buy shares & sell a call at a higher price

Buy call option at one strike & Sell another call option at a higher strike

This is called a bull/call spread

Enter bull/call & sell a put at a lower strike

14. Conclusion

Options are safer than stocks

Options require lower investments

Lower investment reduces risk exposure

Options provide higher potential returns

Buying calls & puts are RRSP eligible

Covered calls are RRSP eligible

15.

Thank you for your attention

Contact CFO Strategies Inc.

David Saxe Investment Strategist

613-563-1085

[email_address]