Risk and Margin

Single Stocks and Narrow-Based Index: +/-25%

A customer cannot lose more than 100% of their liquidating equity for because of the stress test on their positions for the test points referenced above. The maximum potential risk of any position in the portfolio cannot exceed 100% of the customer’s liquidating equity.

VIX Index: -25% TO +200%

A customer cannot lose more than 100% of their liquidating equity for because of the stress test on their VIX positions for the test points referenced above. The maximum potential risk of any position in VIX cannot exceed 100% of the customer’s liquidating equity.

All trading in SVXY and UVXY must adhere to the risk guidelines described above for the VIX index.

Portfolio: +/- 25%

In addition to reviewing the potential risk in individual stocks or indices the customer’s overall portfolio will be reviewed as well. The aggregate maximum potential risk of all positions in the portfolio cannot exceed 125% of the customer’s liquidating equity.

Penalties

Customers are expected to always stay within the above framework. There is no leniency on the Friday of option expiration or the quarter end for options with quarterly expirations.

Failing to comply with the above framework may generate a Risk Warning depending on the circumstances and severity of the maximum potential risk. Risk Warnings will be determined at the discretion of Risk Management.

A customer may have their margin privileges revoked should they continue to accumulate multiple Risk Warnings..