Office of Regulations and Interpretations Office of Exemption Determinations

Employee Benefits Security Administration Employee Benefits Security Administration
Attn: Conflict of Interest Rule, Room N-5655 Attn: D11712 and D-11713

U.S. Department of Labor U.S. Department of Labor

200 Constitution Avenue N.W. 200 Constitution Avenue, N.W.
Washington, D.C. 20210 Washington, D.C. 20210

September 11, 2015
Ladies and Gentlemen:
RE: Proposed Conflict of Interest Rule and Related Proposals, RIN 1210-AB32 and ZRIN: 1210-ZA25

Very recently, I become aware of a proposal that INCREASES MY RISK in my IRA account by
eliminating my participation in options. I have two accounts: a regular joint account with my wife and an
IRA account; I am retired and making withdrawals from my IRA account.

The INCREASED RISK by the proposal is demonstrated with following examples:
1. Assume an IRA account has $100,000. Assume further that a good investor spreads his risk among 10
stocks, i.e. avoids putting all of one’s eggs in one basket. This would be an investment of $10,000 per
stock ($100,000 divided by 10 stocks). A small 100 shares investment results in purchasing stocks under
$10.00 per share ($10,000 divided by 100 shares). Although this is not 100% true, it is generally true that
stocks under $10.00 have a higher risk than the higher priced “blue chip” stocks. Accordingly, my
investments become more limited. For your further information, it is consider best to invest a maximum
of 4-5% of the total investment into one security; this example used 10% for easy computations.

2. The INCREASED RISK also occurs by elimination of my “covered” call options. My strategy is to
sell higher out-of-the-money call options (generally two or three price points above my stock purchase
price). If the stock value increases, great: I receive both the stock price increase and the call option
premium. If the stock remains the same, great: I receive the call option premium and can sell a ‘new call
option. If the stock value decreases, it’s ok: as a long-term investor, I receive the call option premium and
can sell a new call option, which offsets the decreased stock value and REDUCES THE RISK.

3. Options provide opportunities to invest in the higher priced “blue chip” stocks, which cannot be done
in the first example above. For many stocks, a deep in-the-money option (roughly 60-75% of the stock
price, ie. 25-40% strike price) can be purchased without a significant premium. A deep in-the-money call
option with a long future date (say 1 year) allows an investor to affectively own the stock. If desired and
using the covered call approach, the investor can also sell near-term, out-of-the-money, option calls. This
approach REDUCES RISK since less is invested in the stock.

Other examples exist regarding the using options to one’s advantage (including using options as
insurance), but these three examples illustrated the importance of options for an IRA account. I support
options training and option paper trading before actual option trading.

Thank you for your time and consideration of this important subject to my investments.

Sincer ae, yours,

Leh flrs We mcs

Harold Duane Wi
Address: 1369 East 398" Road
Bolivar, Missouri 65613