Trading In A Higher Market! Disclaimers

Investing Risks: The risk of loss from investing in securities (stocks, ETFs, mutual funds, etc.), bonds, options, futures, and forex or related products, can be substantial. Investors must consider all relevant risk factors, including their own personal financial situation, before investing. Investments in bonds and products are subject to various risks (including liquidity, interest rate, financial, and inflation risks) and special tax liabilities.

Options Risks: Options involve risk and are not suitable for everyone. Options Trading privileges are granted at the account level by your custodial broker and are subject to review and approval. Not all accountholders will qualify. Before trading options, a person must receive a copy of Characteristics and Risks of Standardized Options. Individuals should not enter into options transactions until they have read and understood the risk disclosure document, Characteristics and Risks of Standardized Options, which can be found on our website www.mscm.net. Copies may be obtained by contacting your broker or the Options Clearing Corporation.

Spreads, , Strangles, and other multi-leg strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return. These are advance option strategies and often involve greater risk, and more complex risk than basic options trades. Disclaimers

General Disclosures: Any strategies discussed in this presentation, including examples using actual securities and price data, are strictly for illustrative and educational purposes only and are not to be construed as an endorsement, recommendation, or solicitation to buy or sell specific securities or strategies.

Investors should carefully consider the investment objectives, risks, charges, and expenses before investing in any investment product. To obtain a prospectus containing this type of information as well as other important information, contact your custodial broker. Please read the prospectus carefully before investing.

You should discuss any/all implications of investing in such products with your custodial broker, financial adviser/advisor, and/or tax advisor. Past performance is not indicative of future results.

Third Party Information: This presentation may utilize or refer to third party data. In such a case, let it be known that MSCM, LLC. does not control, nor has it developed the content being referred to, and does not make any warranty, express or implied, as to the accuracy, usefulness, timeliness or even the continued availability or existence of said information/content created or maintained by others. Opinions expressed by others are not necessarily those of MSCM, LLC., nor does MSCM, LLC. endorse, , or guarantee products, services or information described or offered by such firms. A Little About Me

• 33+ Year Veteran of the trading and Financial Services Industry • Founder, Co-Founder and or Partner of: • 3 Investment Firms • 2 Onshore/Offshore Hedge Funds • 2 “40 Act” Mutual Funds • Been featured in numerous articles in the financial press including: • CNBC.com • InvestmentNews.com • Dow Jones Newswire • Euromoney Institutional Investor • Markets Media • And has been a regular featured guest on The Educated Investor On CBS radio affiliate KRLD in Dallas. • Former President and Executive Board Member of the Dallas Security Traders Association • Former Chairperson and Co-Chair of the Dallas Chapter of the Market Technicians Association Trader/Investment Manager [email protected] Where Are We Today Where Are We Today Where Are We Today Where Are We Today Fresh Idea’s - List Building In A High Volatility Market Fresh Idea’s - List Building In A High Volatility Market List Building – Think Outside of the Box http://www.sectorspdr.com/sectorspdr/ “Long” Opportunities

• XLU - Utilities • XLRE - Real Estate • NRG – NRG Energy • AVB – Avalonbay • NEE – Nextera Energy • SPG – Simon Property • SO – Southern Company Grp

• XLV – Health Care • Honorable Mentions • ESRX – Express Scripts • UGI – UGI Corp • PFE – Pfizer • WBA – Walgreens • MDT - Medtronic • USM – US Cellular “Long” Opportunities

• XLU - Utilities • NRG – NRG Energy • NEE – Nextera Energy • SO – Southern Company

“Long” Opportunities

• XLV – Health Care • ESRX – Express Scripts • PFE – Pfizer • MDT - Medtronic

“Long” Opportunities

• XLRE - Real Estate • AVB – Avalonbay • SPG – Simon Property Grp

“Long” Opportunities

Honorable Mentions • UGI – UGI Corp • WBA – Walgreens • USM – US Cellular

“Long” Opportunities

• XLU - Utilities • XLRE - Real Estate • NRG – NRG Energy • AVB – Avalonbay • NEE – Nextera Energy • SPG – Simon Property • SO – Southern Company Grp

• XLV – Health Care • Honorable Mentions • ESRX – Express Scripts • UGI – UGI Corp • PFE – Pfizer • WBA – Walgreens • MDT - Medtronic • USM – US Cellular Shorting Opportunities

• CLR – Continental Resources • AIMT – Aimmune Therapeutics • DVN - Devon Energy • IRC – Irhythm Tech • NOV – National Oilwell Varco • LOXO – Loxo Oncology • PDCE – PDC Energy Inc • NP Neenah Paper • SLB – Schlumberger Lt. • BPMC – Blueprint Medical

A Basic Strategy to Increase Buying Power The Poor Man’s

• A “Poor Man’s Covered Call” is a Long Call Diagonal Spread that is used as a substitute for a Long Stock/Short Call (“Covered Call”) Position. • Your Directional Assumption is Bullish • Done in Low Environments. PMCC Diagonal Spreads: Things To Know

• For a Passive Position - Consider Keeping Your Debit Between 50%- 75% The Width Of The Spread • For a Dynamic Position - Calculate the Opportunity of Eliminating the Long Options Extrinsic Value while profiting from Directional Moves PMCC Diagonal Spreads: Management

• Market Moves In Your Direction? Adjust or Close • Market Moves Against You? Adjust or Close It’s All About Time To A Common Sense Approach

• A PMCC/CP is a great alternative to trading a traditional covered call using stock. • In smaller accounts, this position can be used to simulate a covered call position with less capital and much less risk than an actual covered call. Also Known As A Poor Man’s Covered Call Poor Man’s Covered Put Begin by using any list that contains stocks that meets your prognosis

• Moving Average Crossover • Leading Sectors • An Imported List • Any other directional list Some Examples Let’s Do A Little Comparison Adobe (ADBE) January 2, 2018

Stock vs PMCC Adobe Systems (ADBE) January 2, 2018 Comparison Adobe (ADBE) January 2, 2018

Buy Stock – 100 Shrs ADBE @ 177.70 = $17,700

Passive version PMCC - $3265 (x 5 = $16325)

Active version PMCC - $3,206 (x 5 = $16,030) Let’s Discuss the Passive Version First ADBE Buy Side Sell Side

At Expiration Closing Passive Position Summary April 18, 2018

• Entry Debit - $2,643 • Profit - $1017 • ROR – 39% • (10.17% return per $10K) • Stock Position Return – 30% Passive PMCC Summary

• Stock moved quickly through short strike. • Potentially stuck in the position without additional profit potential. • A nice profit was achieved but could we have done better? Actively Managed PMCC What About IV Day Prior To Exit Close Position Adobe (ADBE) June 19, 2018

Buy Stock – 100 Shrs ADBE @ 177.70 = $17,700 Close Stock – 100 Shrs ADBE @ 251.74 = 25,174 A Return of 42% on Risk generating $7,474

Buy PMCC - $3,206 Close PMCC - $5,582 A Return of 174% on Risk!

($5582 x 2 = $11,164) – 11.16% Return per $100K v. 7.47% return on Stock (per 100K account) Does this strategy work for stocks in a bearish pattern? General Electric (GE) January 2, 2018

Be Sure To Take Time to Check Your Progress April 20, 2018

In Summary

Pro’s • Poor Mans Covered Calls are a good stock replacement strategy. • Best used in a Low Implied Volatility Environment. • More efficient use of capital.

Con’s • May underperform vs actual stock ownership • Harder to make money when done in High Implied Volatility Environments Q&A? Contact Jeffrey Beamer [email protected] 214-922-9200