Greg Flower Wealth Management. Discretionary Wealth Management

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1 Greg Flower Wealth Management Discretionary Wealth Management

2 Disclaimer The information included in this document, including any opinion, is based on various sources believed to be reliable, but its accuracy and completeness is not guaranteed and Leede Financial Markets Inc. does not assume any liability in providing it. The information provided is current as of the date appearing on the document and Leede Financial Markets Inc. does not assume any obligation to update the information or give a description of further developments relating to the securities or material discussed. It is for information only, is subject to change at any time, and does not constitute an offer or solicitation to buy or sell any securities referred to. The information presented here and any financial service being offered is directed only at persons who are residents of a Canadian province or territory where Leede Financial Markets Inc. is licensed. Leede Financial Markets Inc. is not permitted to recommend buying, selling or holding securities of any issuer to which it is related, and in the course of a distribution, to which it is connected, unless it makes a complete statement of its relationship, if any. Leede Financial Markets Inc. is not permitted to recommend buying of any secondary market securities of an issuer for whom it is actively engaged as an underwriter of a new issue. Leede Financial Markets Inc., their affiliates, directors, officers, and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. Directors, officers or employees of Leede Financial Markets Inc. may serve as directors of any company mentioned herein, its affiliates or subsidiaries. Leede Financial Markets Inc Member CIPF and IIROC. Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e. put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs. The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a future, the purchaser will acquire a futures position with associated liabilities for margin (see the section on Futures above). If the purchased options expire worthless, you will suffer a total loss of your investment which will consist of the option premium plus transaction costs. If you are contemplating purchasing deep-out-of-the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote. Selling ("writing" or "granting") an option generally entails considerably greater risk than purchasing options. Although the premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount. The seller will be liable for additional margin to maintain the position if the market moves unfavorably. The seller will also be exposed to the risk of the purchaser exercising the option and the seller will be obligated to either settle the option in cash or to acquire or deliver the underlying interest. If the option is on a future, the seller will acquire a position in a future with associated liabilities for margin (see the section on Futures above). If the option is "covered" by the seller holding a corresponding position in the underlying interest or a future or another option, the risk may be reduced. If the option is not covered, the risk of loss can be unlimited. Certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time. Not all securities are suitable for every investor. If any of the securities interests you, please feel free to contact Greg Flower at The comments and opinions expressed herein reflect the personal views of Greg Flower. They may differ from the opinions of Leede Financial Markets Inc. and should not be considered representative of the research beliefs, opinions or recommendations of Leede Financial Markets Inc.

3 The Current Investment Dilemma Traditionally, retirement portfolios would hold a large portion of Bonds Unfortunately, in the current environment their yield would not finance many retirements A portfolio of large cap dividend paying stocks can be built topay out a yield higher than that paid by a portfolio of investment grade bonds. Current equity environment does not forecast the type of growth seen over the past few decades Equities are more volatile How does an retiree create a portfolio that would finance a retirement in this environment without taking undue risk?

4 The PUT/Call Option Strategy Investor has a need to invest in equities as this asset class can generate a higher more tax effective yield than bonds. Investor would like to enhance yield to be greater than the dividend alone. Investor would like this enhanced yield to be treated as capital gains which are more tax effective. Investor may have capital losses in current or previous years that could be used to further mitigate tax. (Losses can be carried forward indefinitely) Strategy reduces risk of investing in equities and produces tax efficient enhanced yield.

5 The PUT/Call Option Strategy Matrix Strategy reduces risk of investing in equities and produces tax efficient enhanced yield.

6 The Covered Call Strategy Enhancing Portfolio Returns and Mitigating the Risk of Equity Exposure First, we build a diversified portfolio of large capitalization stocks most of which will pay a dividend. Although not exciting returns, these will yield around 3%. Without any additional work, this is still preferable to bond returns. Second, we utilize a strategy of selling covered call options against the existing equity positions. This will generate and additional 2-3% per quarter of income, plus bonus gains if the target call price is achieved. What is selling a covered call? By selling a call against an existing position our strategy gives another investor the right to buy the position from us at a set price any time within a specified time frame at a price higher than the current market.

7 The Put Strategy Enhancing Portfolio Returns and Mitigating the Risk of Equity Exposure Investor is bullish on the company but does not see the stock rising over the short term Investor is comfortable buying the stock at a price lower than the current market price and will buy at the strike price even if market is below strike

8 The Covered Put Strategy a Diversified Approach Enhancing Portfolio Returns and Mitigating the Risk of Equity Exposure Note: This is an example of premiums at a certain point in time. Premiums generated will change based on market conditions.

9 Greg Flower Wealth Management Discretionary Wealth Management