Series 4 case studies
Series 4 · Put your knowledge to work in context.
The Series 4 - formally the Registered Options Principal Qualification Exam (OP) - is FINRA's principal-level qualification exam for supervising a member firm's options business. It assesses whether an entry-level principal can perform the job: applying the rules and statutory provisions that govern supervisory management of a firm's options personnel, accounts and trading, along with the exchange rules and regulations applicable to options contract trading. The Series 4 case studies are 5 cases and about 3,767 words.
1The 22-Day Options Agreement
Denise Ortega, 74, is retired with 180,000 in liquid net worth and 42,000 of annual income from Social Security and a pension. Her objective is coded "income" and she has no options experience.
752 words, about 4 min2The Level 2 Account That Wasn't
During a quarterly surveillance review you pull the file of client Warren Kessler, approved 14 months ago for Level 2 (long calls and puts only). The last 90 days show 41 tickets: 17 sell-to-open strangles with uncovered legs, 9 debit spreads, and 6 orders marked "not held." Sixty-two percent of the account's 310,000 sits in a single small-cap biotech.
779 words, about 4 min3Twenty-Six Thousand Calls for Margaret Chen
Your firm's position limit for XYZ common stock options is 25,000 contracts on the same side of the market. Margaret Chen holds, at Monday's close: 14,000 XYZ calls in her individual account; 4,000 XYZ calls in her IRA; 5,000 XYZ calls in an account titled to Chen Holdings LLC, which she wholly owns and controls; and 3,000 XYZ calls in an account for her father, over which she holds a power of attorney and places every trade.
751 words, about 4 min4Income Without Worry
One of the 400 recipients is a customer who filed a complaint against Dave eight months ago about unsuitable options trades. Dave says the flyer is already "internally approved" because his branch manager signed it.
738 words, about 4 min5The Branch That Approved Itself
Rick is the firm's only Registered Options Principal. He supervises 22 registered representatives across four locations and personally generates 60% of the firm's commissions.
747 words, about 4 min