Beverly Gordon - Page 8

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          market maker, during 1986 Mr. Gordon had the opportunity to stand           
          at a post on the AMEX trading floor, where buyers and sellers in            
          a particular option are concentrated and where trades occur by              
          open outcry, and to participate in public orders that came into             
          that post.  For example, as an options market maker, during 1986            
          Mr. Gordon may have been obligated to provide a bid price for an            
          option on a particular stock, and traders on the floor of the               
          AMEX could go to him either to buy or sell options at that bid              
               As an options market maker, during 1986 Mr. Gordon purchased           
          a particular option at a certain bid price, owned that option for           
          his own account, and expected to sell it at a slightly higher               
          offered price.  As such, Mr. Gordon took a position, that is,               
          held an option, with a profit expectation derived from the                  
          fluctuations in the market.  A great deal of Mr. Gordon's trading           
          activity as an options market maker during 1986 was in options on           
          the stock index, XMI.  XMI is a stock index gauging the top 20              
          capitalized stocks on the NYSE.                                             
               During 1986, Mr. Gordon bought and sold over 50,000 option             
          contracts in the normal course of his trade or business as an               
          options market maker, and he did not identify any of those trades           
          in options as a hedging transaction.  All of the options that Mr.           
          Gordon traded during that year were marked to market contracts.             
          During 1986, Mr. Gordon was not a specialist on the NYSE who made           
          a market in the stocks underlying the options that he traded.               

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