LEAPS Long Term Equity Anticipation Securities

LEAPS Basically a Long Term Option Basically a Long Term Option Minimum of 1 Year Out Minimum of 1 Year Out Maximum of 3 Years Out Maximum of 3 Years Out Excellent Investment Tool For Retirement Accounts Excellent Investment Tool For Retirement Accounts Advantage of Leverage Advantage of Leverage Ideal for Conservative Investors Ideal for Conservative Investors

Searches/Selection Investools Big Chart Investools Big Chart –Future Industries/Sectors That Will Remain Strong Bullish Searches Bullish Searches –Strong Stocks in Multiple Time Periods –Great Earnings, Sales and Cash Flow Growth –Growth Stock Strategy #1 –Growth Stock Strategy #2 Global Search Global Search –Customize IBD (Investors Business Daily) 100 IBD (Investors Business Daily) 100

Strategies Can Be Used on Traditional Stocks or on Equity Indices Can Be Used on Traditional Stocks or on Equity Indices Alternative to Outright Stock Purchase Alternative to Outright Stock Purchase Can Be Used on Stocks That Have Recently Split Can Be Used on Stocks That Have Recently Split Can Sell a Current Month Call on a Future Position (Like a Covered Call) Can Sell a Current Month Call on a Future Position (Like a Covered Call)

Traditional Stock/Equity Index Not All S/E Have LEAPS – CBOE Not All S/E Have LEAPS – CBOE Are High Premium Because of Longer Period of Time Value Are High Premium Because of Longer Period of Time Value Break Even Point at Expiration Higher Than Usual Break Even Point at Expiration Higher Than Usual Examples: POT, RIMM, GG Examples: POT, RIMM, GG

POT – Potash Corp 12/3/07 Straight Purchase Straight Purchase –$ for 100 Shares = $12,384 LEAPS Purchase January 2010 (Exp 774) LEAPS Purchase January 2010 (Exp 774) Deep In The Money vs Out of The Money Deep In The Money vs Out of The Money –Investment Diff = $1250 / B/E Diff = $17.50 –Deep In The Money $100 Call $52.30 Premium = $5230 B/E $ (Mine was $37 on 9/12/07) $100 Call $52.30 Premium = $5230 B/E $ (Mine was $37 on 9/12/07) –In The Money (ITM) $110 Call $47.80 Premium = $4780 B/E $ $110 Call $47.80 Premium = $4780 B/E $ –At The Money (ATM) $120 Call $43.60 Premium = $4360 B/E $ $120 Call $43.60 Premium = $4360 B/E $ –Out of The Money (OTM) $130 Call $39.80 Premium = $3980 B/E $ $130 Call $39.80 Premium = $3980 B/E $ Straight Purchase vs LEAPS Purchase Straight Purchase vs LEAPS Purchase –Investment Diff = $7154

RIMM – Research In Motion Straight Purchase Straight Purchase –$ for 100 Shares = $10475 LEAPS Purchase January 2010 (Exp 774) LEAPS Purchase January 2010 (Exp 774) Deep In The Money vs Out of The Money Deep In The Money vs Out of The Money –Deep In The Money $90 Call $45.85 Premium = $4585 B/E $ (Mine was $33.40 on 9/12/07) $90 Call $45.85 Premium = $4585 B/E $ (Mine was $33.40 on 9/12/07) –In The Money (ITM) $100 Call $42.05 Premium = $4205 B/E $ $100 Call $42.05 Premium = $4205 B/E $ –At The Money (ATM) $105 Call $40.30 Premium = $4030 B/E $ $105 Call $40.30 Premium = $4030 B/E $ –Out of The Money (OTM) $110 Call $38.60 Premium = $3860 B/E $ $110 Call $38.60 Premium = $3860 B/E $ –Investment Diff = $725 / B/E Diff = $12.75 Straight Purchase vs LEAPS Purchase Straight Purchase vs LEAPS Purchase –Investment Diff = $5890

GG – Gold Corp 12/3 07 Straight Purchase Straight Purchase –$32.58 for 100 Shares = $3258 LEAPS Purchase January 2010 (Exp 774) LEAPS Purchase January 2010 (Exp 774) Deep In The Money vs Out of The Money Deep In The Money vs Out of The Money –Deep In The Money $20 Call $15.80 Premium = $1580 B/E $35.80 (Mine was $11.30 on 9/12/07) $20 Call $15.80 Premium = $1580 B/E $35.80 (Mine was $11.30 on 9/12/07) –In The Money (ITM) $30 Call $10.40 Premium = $1040 B/E $40.40 $30 Call $10.40 Premium = $1040 B/E $40.40 –At The Money (ATM) $35 Call $8.40 Premium = $840 B/E $43.40 $35 Call $8.40 Premium = $840 B/E $43.40 –Out of The Money (OTM) $40 Call $6.70 Premium = $3860 B/E $46.70 $40 Call $6.70 Premium = $3860 B/E $46.70 –Investment Diff = $2280 / B/E Diff = $10.90 Straight Purchase vs LEAPS Purchase Straight Purchase vs LEAPS Purchase –Investment Diff = $1678

Split Strategy Check News for Split Calendar Check News for Split Calendar Monitor Strong Stocks That Are Nearing Split Monitor Strong Stocks That Are Nearing Split Use Investools Split Analysis (Basic Stocks) Use Investools Split Analysis (Basic Stocks) As a General Rule the LEAPS Split Strategy is Best for a 2 for 1 Split As a General Rule the LEAPS Split Strategy is Best for a 2 for 1 Split Historically a Stock Will Achieve Its Prior Split Value in 24 Months Time Historically a Stock Will Achieve Its Prior Split Value in 24 Months Time Purchase LEAPS Shortly After Post Split Depression Purchase LEAPS Shortly After Post Split Depression

Sell Current Month Call Another Way to Increase Account Value Another Way to Increase Account Value Similar to Stock Covered Call Similar to Stock Covered Call Allows For Partial to Full Recouping of Original Premium for LEAPS Allows For Partial to Full Recouping of Original Premium for LEAPS Want to Sell as Far Out of The Money as Possible to Preserve Original LEAPS Want to Sell as Far Out of The Money as Possible to Preserve Original LEAPS Want to Expire Worthless to Keep Premium Want to Expire Worthless to Keep Premium Examples: POT, RIMM, GG Examples: POT, RIMM, GG

POT 12/3/07 POT $ POT $ –Dec $1.10 –Dec $1.67 –Dec $2.60 –Dec $4.05 –Dec $5.95

RIMM 12/3/07 RIMM $ RIMM $ –Dec $1.77 –Dec $3.48 –Dec $4.72 –Dec $6.35 –Dec $8.47

GG 12/3/07 GG $32.58 GG $32.58 –Dec $.07 –Dec $.20 –Dec $.58

More Examples My Personal Account 12/3/07 My Personal Account 12/3/07 –POT 9/12/07 37, Mark Profit $3055 9/12/07 37, Mark Profit $3055 Investment = $3700 Return = 82.57%/3 = 27.52% Monthly or % Annually Investment = $3700 Return = 82.57%/3 = 27.52% Monthly or % Annually If Straight Purchase on $89.00, Current Close Price $ = $3484 Gain, Return = 39.15%/3 = 13.05% Monthly or 156.6% Annually If Straight Purchase on $89.00, Current Close Price $ = $3484 Gain, Return = 39.15%/3 = 13.05% Monthly or 156.6% Annually

More Examples My Personal Account 12/3/07 My Personal Account 12/3/07 –RIMM 9/12/ , Mark Profit $ /12/ , Mark Profit $ Investment = $3340 Return = 61.31%/3 = 20.44% Monthly or % Annually Investment = $3340 Return = 61.31%/3 = 20.44% Monthly or % Annually If Straight Purchase on $85.00, Current Close Price $ = $1975 Gain, Return = 23.24%/3 = 7.75% Monthly or 92.9% Annually If Straight Purchase on $85.00, Current Close Price $ = $1975 Gain, Return = 23.24%/3 = 7.75% Monthly or 92.9% Annually

More Examples My Personal Account 12/3/07 My Personal Account 12/3/07 –GG 9/12/ , Mark Profit $430 9/12/ , Mark Profit $430 Investment = $1130 Return = 38.05%/3 = 12.68% Monthly or 152.2% Annually Investment = $1130 Return = 38.05%/3 = 12.68% Monthly or 152.2% Annually If Straight Purchase on $27.00, Current Close Price $32.58 = $558 Gain, Return = 20.67%/3 = 6.89% Monthly or 82.67% Annually If Straight Purchase on $27.00, Current Close Price $32.58 = $558 Gain, Return = 20.67%/3 = 6.89% Monthly or 82.67% Annually

I Am Sold on LEAPS More Conservative Approach More Conservative Approach Excellent Tool for IRA, IRRA, 401k Excellent Tool for IRA, IRRA, 401k Q & A Q & A Comments Comments