Invest Disclosures

Special Statement for Uncovered Option Writers

Special risks are involved with uncovered options writing that may expose investors to potential losses. This type of strategy may not be suitable for all approved for options trading. Losses that may occur could be significant and must be understood before employing this strategy. Uncovered put writing is limited to the price of the security dropping to zero. Investors should be aware of such potential loss. Uncovered call writing has unlimited loss potential. This strategy is extremely risky, and the extent of possible losses should be understood before investing.

The use of uncovered option writing should be limited to those that are suitable to this investment. To employ this strategy, investors must have substantial financial capability in which to withstand significant loss. Market movements may require investors to meet margin calls which would require more funds or securities in the account to meet the margin requirements. Absent the deposit of funds or securities, investors’ assets in the account may be liquidated to meet the margin requirements. In addition, this type of option writing should be consistent with investors’ objectives.

Option writers are subject to liquidity in the market where open contracts may not be closed as directed, which would subject investors to possible assignment. If assigned, investors may have to fulfill the terms of the contract by either purchasing a security or delivering the underlying security. Investors should be aware that regardless of the liquidity of the market, they are always subject to possible assignment which may occur at a disadvantaged market condition that may result in substantial losses.

Other risks might be associated with writing uncovered options. Investors should read and understand  Characteristics and Risks of Standardized Options , for further information.

04/07/2006 Version 001