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tained at least through 1993. Sometime after February 26, 1987,
but prior to December 31, 1987, she submitted an application to
Charles Schwab to add options trading to her Charles Schwab
brokerage account. In that application, Ms. Gordon indicated,
inter alia, (1) that she had 10 years of investment experience
that consisted of engaging during each such year in 10 stock
transactions ranging from $5,000 to $15,000 and (2) that she had
"Good", rather than "Limited" or "Extensive", investment knowl-
edge. Charles Schwab approved that application and provided to
Ms. Gordon two form disclosure documents entitled "What You
Should Know About Option Trading at Schwab" and "Characteristics
and Risks of Standardized Options". During all relevant periods,
Charles Schwab issued monthly statements to Ms. Gordon reflecting
her account activity.
During all relevant periods, Ms. Gordon occasionally pur-
chased and sold stocks of various corporations (e.g., Compaq
Computer, Mylex, and General Electric). During the latter part
of 1987, based on Mr. Gordon's advice, Ms. Gordon, who at that
time owned the stock of Compaq Computer Corporation, sold for $55
each two Compaq Computer call options with expiration dates of
February 20, 1988, that were not exercised.
During all relevant periods, Ms. Gordon, who had an under-
standing of some of the financial products bought and sold in
financial markets by investors, managed her own investments and
reviewed the account statements issued to her in order to keep
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