OPTION DEPT. PPROVAL: F.; O. w Cl kij2 a O 2 O cc O O O Covered Call Writing I Purchasing Options O Option Spreads ROSFP T Date Comments: L I O Uncovered Put Writing n Uncovered Call Writing -1- Risks, Prohibitions and General Information Concerning Option Trading Important: Please read this appendix I understand that options transactions involve a high degree of risk and offer no guarantee of gain or assurance against loss. Accordingly, I understand that prior to engaging in any option transaction, I should review my present financial situation and determine whether it is advisable to incur the risk of loss associated with that particular investment. 1. I understand that when I engage in option trading I expose myself to certain, potentially substantial financial risks in addition to those identified on the front side of this form under the heading "Client(s) Strategy Requests," including but not limited to the following: • I understand that I should not buy en option unless I am able to sustain a total loss of the premium and transaction costs. • If I sell (write) covered options, I understand that I may forfeit participation in capital gains but retain risk of participation in capital losses in the underlying security. I understand that if an exercise is assigned to me, I may be forced to liquidate my position in the underlying security at a time which may be unfavorable to me. I also understand that I should not sell (write) a covered call option unless I am prepared to deliver the underlying security (or a security convertible, exchangeable, or exercisable into such underlying security) upon the exercise of the option. • If I sell (write) uncovered (naked) options, I risk substantial capital loss if, and to the extent that, the market price of the underlying security increases above the strike price of a call or decreases below the strike price of a put. If an exercise is assigned to me, it will, in all likelihood, be at a time w