1 TRADING COURSE – SESSION 2 © Copyright Options Trading IQ. All Rights reserved.

2 Any information contained in this presentation is for educational purposes only. Neither IQ Financial Services, LLC or Gavin McMaster are licensed financial advisors, registered investment advisors, or registered broker dealers. Neither do they provide investment advice, financial advice or make investment recommendations and they are not in the business of transacting trades. Nothing in this communication constitutes a solicitation, recommendation, promotion, endorsement or offer to buy or sell by IQ Financial Services, LLC or Gavin McMaster of any particular security, transaction or investment. Any trades and / or results covered in this presentation may or may not be live trades. All trades and trading results are believed to be accurately presented. However, since the trades may not have been executed in the market, the results may have been under or over compensated for the impact, if any, of certain market factors such as liquidity, slippage and commissions. Therefore there can be no guarantee of accuracy or completeness. The risk of loss in trading securities and options in particular can be substantial. Customers must consider all relevant risk factors, including their own personal financial circumstances, before making any financial transaction. Options involve risk and are not suitable for all investors. See the Options Disclosure Document: Characteristics and Risks of Standardized Options, available from © Copyright Options Trading IQ. All Rights reserved. DISCLAIMER

3 © Copyright Options Trading IQ. All Rights reserved. OUTLINE Market Update / ChartsWeekly Butterfly Trade and ExplanationTrading PlansDiagonal Examples Bearish Butterfly Scaling Example Wheel Examples

16 © Copyright Options Trading IQ. All Rights reserved. HANDLING BIG DOWN DAYS Panic? Close Out? Buy Yourself Some Time?

IRON CONDOR TRADING PLAN

TRAPDOOR TRADING PLAN

BB TRADING PLAN

WEEKLY B-FLY TRADING PLAN

DIAGONALS TRADING PLAN

32 © Copyright Options Trading IQ. All Rights reserved. DIAGONAL SPREAD EXAMPLES Entry Feb 20th Exit Feb 26th

33 © Copyright Options Trading IQ. All Rights reserved. DIAGONAL SPREAD EXAMPLES

35 © Copyright Options Trading IQ. All Rights reserved. DIAGONAL SPREAD EXAMPLES Entry Feb 28th 10:17am Exit Feb 28th 3:07pm

38 © Copyright Options Trading IQ. All Rights reserved. DIAGONAL SPREAD EXAMPLES Entry Mar 3rd 12:09pm Exit Mar 3rd 1:24pm

41 © Copyright Options Trading IQ. All Rights reserved. DIAGONAL SPREAD EXAMPLES Entry Mar 4th 12:30pm Exit Mar 5th 9:55am

BEARISH BUTTERFLY How Scaling In Works

BEARISH BUTTERFLY

49 © Copyright Options Trading IQ. All Rights reserved. SOME GUIDELNES TO CONSIDER Sell First Put When IV Is In The Higher End Of The 6 Month Range Wait For A 5% Pullback Before Selling First Put Stop Loss 15% Below Where The Stock Was Trading When First Put Was Sold Adjust Stop Loss If Multiple Puts Have Been Sold?

50 © Copyright Options Trading IQ. All Rights reserved. SOME GUIDELNES TO CONSIDER Sell Puts 5% OTM? Delta? Sell Call 5% OTM. Or Near Initial Stock Price Sell First Put When RSI < 30Stick To Low Beta, High Dividend Stocks

51 © Copyright Options Trading IQ. All Rights reserved. SOME GUIDELNES TO CONSIDER If The Stock Continues To Fall, It’s Ok To Sell A Call Below Cost Only If You Have Received Enough Put Premiums To Offset The Cost Basis If You Have Sold Numerous Puts, Your Actual Cost Basis Can Be Very Low

52 © Copyright Options Trading IQ. All Rights reserved. WHICH STOCKS? JNJ, KO, MO, KMB, SPY, WMT, IBM, MSFT Other High Dividend Stocks. Industry Leaders EEM, EWZ?TSLA, TWTR? AAPL, GOOG?Stocks You Are Happy To Own In Your 401K

53 © Copyright Options Trading IQ. All Rights reserved. EXAMPLE JNJ Trading at $98 at April 2 Sell $95 June Put for $1.50 JNJ Falls Below $95, You Get Assigned And Own 100 Shares With A Cost Basis Of $93.50 Now Sell Oct $97.50 Call For $1.50 and Oct $90 Put For $1.50 Received $450 In Premium. Bought Shares for $9,500

54 © Copyright Options Trading IQ. All Rights reserved. EXAMPLE Cost Basis Is $9,050 or $90.50 Per Share At October Expiry, JNJ Is Below $90. You Get Assigned On Another 100 Shares At $90 Now Sell 2 Jan $95 Calls

55 © Copyright Options Trading IQ. All Rights reserved. EXAMPLE Bought 100 Shares At $95 and 100 At $90 Total Paid For 200 Shares $18,500 Ave $ x $150 Received From Puts And CallsNet Cost Basis Is $17,750 or $88.75 Per Share

56 © Copyright Options Trading IQ. All Rights reserved. EXAMPLE At October Expiry, If JNJ Is Below $95, Sell 2 More Calls. Collect Dividends If Above $95, Your Shares Are Called Away Total Profit = $95 - $88.75 x 200$1,250

57 © Copyright Options Trading IQ. All Rights reserved. EXAMPLE - GE Tough Trade But Worked Well In The End In A Massive Hole, But Worked My Way Back Ignored My Stop Loss Finished With 20% Return Compared to -42% For The Stock

Can help generate monthly income and gain exposure to a stock while reducing average cost. Can produce a gain, even when the underlying falls. There are risks involved and you need to stick to your trading rules. CONCLUSION

60 THANK YOU! © Copyright Options Trading IQ. All Rights reserved.