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Series 4 practice questions

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Question 1Supervise the Opening of New Options Accounts

Under FINRA rules, when must a member firm furnish the Options Disclosure Document to a customer opening an options account?

  1. At or before account approval Correct answer.
  2. Only when the customer requests a copy in writing
  3. Within 10 business days after the first options trade
  4. At the end of the quarter in which the account is opened

Explanation

The Options Disclosure Document must be delivered to the customer at or before the time the account is approved for options trading, so the customer has the risk disclosure before any options order is accepted. Delivery after the first trade or only on request does not satisfy the rule.

Question 2Supervise the Opening of New Options Accounts

A customer's signed options account agreement must be returned to the firm within how many days after the account is approved for options trading?

  1. 30 days
  2. 15 days Correct answer.
  3. 5 calendar days
  4. 60 days

Explanation

FINRA requires that the signed options account agreement be obtained within 15 days of account approval. If it is not returned in that period, the firm must stop accepting new options orders and take steps to close existing positions.

Question 3Supervise the Opening of New Options Accounts

Which individual is qualified to approve a new options account?

  1. A registered options principal who holds a Series 4 registration Correct answer.
  2. A registered representative who holds a Series 7 registration
  3. A general securities principal who holds a Series 24 registration only
  4. A municipal securities principal who holds a Series 53 registration

Explanation

Options account approval is the responsibility of a registered options principal, the registration for which is the Series 4. General principals and sales representatives lack the specific options qualification unless they also hold the Series 4.

Question 4Supervise the Opening of New Options Accounts

The disclosure document that must be furnished to new options customers is titled:

  1. The Options Investor Protection Guide
  2. Understanding Margin at the Options Clearing Corporation
  3. Standard Terms of Options Account Agreements
  4. Characteristics and Risks of Standardized Options Correct answer.

Explanation

The required risk disclosure is the booklet 'Characteristics and Risks of Standardized Options,' which describes the mechanics and risks of standardized options. Firms must deliver it to customers at or before account approval.

Question 5Supervise the Opening of New Options Accounts

Which document must a customer sign when opening an options account?

  1. The options disclosure document
  2. The options account agreement Correct answer.
  3. The firm's privacy notice
  4. The margin maintenance worksheet

Explanation

The options account agreement is the signed contract in which the customer acknowledges obligations such as complying with position and exercise limits and applicable rules. The disclosure document is delivered for the customer's information but is not the signed agreement.

Question 6Supervise the Opening of New Options Accounts

A registered representative accepts a new customer's first options order before the account has been approved for options trading. This action is:

  1. Acceptable if the customer signs the agreement within 15 days
  2. A violation, because approval must precede the first options trade Correct answer.
  3. Acceptable if the order is unsolicited
  4. Acceptable if the disclosure document was mailed that same day

Explanation

An account must be reviewed and approved for options trading before any options order is accepted, whether solicited or unsolicited. Neither mailing the disclosure document nor a later signature cures the premature trade.

Question 7Supervise the Opening of New Options Accounts

Records documenting the approval of a customer's options account must generally be retained for:

  1. Ten years
  2. Two years
  3. One year
  4. Six years Correct answer.

Explanation

Account records, including documentation of options account approval and the customer information relied upon, are generally retained for six years under the recordkeeping rules. Shorter periods do not satisfy the requirement.

Question 8Supervise the Opening of New Options Accounts

Which item must the firm obtain from a customer before approving an options account?

  1. The customer's employer's written consent
  2. A copy of the customer's most recent tax return
  3. The customer's net worth and annual income Correct answer.
  4. The customer's credit score

Explanation

The approval decision rests on the customer's financial profile, including net worth and annual income, together with investment objectives and options experience. Credit scores, tax returns, and employer consents are not required elements of that review.

Question 9Supervise the Opening of New Options Accounts

An account was approved for options trading 20 days ago, but the signed options account agreement has never been returned. The firm should:

  1. Stop accepting new options orders and take steps to close existing positions Correct answer.
  2. Substitute a recorded verbal authorization for the written agreement
  3. Continue accepting new orders because approval already occurred
  4. Liquidate every position immediately at any available price

Explanation

When the signed agreement is not received within 15 days of approval, the firm may not accept new options orders and should move to close out existing positions in an orderly manner. The account cannot be kept open indefinitely on the strength of the original approval.

Question 10Supervise the Opening of New Options Accounts

Documentation of an options account approval should include:

  1. The clearing firm's margin approval only
  2. Only the date the disclosure document was printed
  3. The customer's signature on the disclosure document
  4. The approver's identity, date, and authorized level Correct answer.

Explanation

The firm must be able to show who approved the account, when approval occurred, and what level of options trading was authorized. That record supports later supervision and demonstrates compliance with the approval requirement.

Question 11Supervise the Opening of New Options Accounts

A customer wants to give a registered representative discretion to trade options in the account. The firm must:

  1. Require the customer to initial each discretionary order after execution
  2. Prohibit discretion in options accounts under all circumstances
  3. Obtain the customer's verbal consent recorded on the order ticket
  4. Obtain written authorization and ROP approval Correct answer.

Explanation

Discretionary options trading requires written authorization from the customer and written approval by a registered options principal before discretionary orders are entered. Verbal consent or after-the-fact initials do not satisfy the requirement.

Question 12Supervise the Opening of New Options Accounts

When opening an options account for a corporation, the firm should obtain:

  1. Documentation of the signer's authority to trade options Correct answer.
  2. A copy of the corporation's most recent tax return
  3. The signature of every shareholder of record
  4. A personal guarantee from the corporation's president

Explanation

For an entity account, the firm must establish that the individual acting for the entity is authorized to do so, typically through a resolution or similar documentation. Approval also requires the entity's financial information and investment objectives.

Question 13Supervise the Opening of New Options Accounts

A prospective customer declines to provide net worth, income, or investment objective information. The firm:

  1. May approve the account if trading is limited to covered calls
  2. May approve the account if the representative has known the customer for years
  3. Cannot approve the account for options trading Correct answer.
  4. May approve the account and collect the information later

Explanation

Approval requires an affirmative suitability determination based on the customer's financial resources, objectives, and experience. Without that information the principal cannot make the required determination, so the account cannot be approved for options.

Question 14Supervise the Opening of New Options Accounts

A customer with no prior options experience wishes to open an options account. The firm:

  1. Must wait six months after the disclosure document is delivered
  2. May approve if objectives and financial resources support it Correct answer.
  3. May approve it only after the customer completes an options course
  4. Must deny the account, since options experience is a prerequisite

Explanation

Lack of prior options experience is a factor in the suitability analysis but is not an absolute bar. The principal may approve an account where the customer's objectives and financial resources support the trading, often at a restricted level.

Question 15Supervise the Opening of New Options Accounts

An account that will be used only to hedge an equity portfolio with options must be:

  1. Exempt from approval because hedging is not speculative
  2. Opened without delivering the disclosure document
  3. Approved by the firm's compliance department instead of a principal
  4. Approved by a registered options principal Correct answer.

Explanation

Hedging is a stated investment objective rather than an exemption from the account-opening rules. The account still requires principal approval, delivery of the disclosure document, and a signed agreement, although the authorized level may reflect the hedging purpose.

Question 16Supervise the Opening of New Options Accounts

Which statement about a registered representative's role in opening an options account is accurate?

  1. The representative may gather information but not approve the account Correct answer.
  2. The representative may approve the account if no principal is available
  3. The representative may set the trading level without review
  4. The representative may skip the disclosure document for experienced customers

Explanation

The representative collects and documents customer information and forwards it for review, but approval authority belongs to a registered options principal. Neither the trading level nor the approval decision may be made by the representative alone.

Question 17Supervise the Opening of New Options Accounts

A customer has consented to electronic delivery of account documents. The Options Disclosure Document may be delivered:

  1. Only after the first trade is executed
  2. Only if the customer signs and returns the document
  3. Electronically, if consent requirements are met Correct answer.
  4. Only in paper form by regular mail

Explanation

Electronic delivery satisfies the disclosure requirement when the customer has consented and the firm meets the applicable access and notice conditions. The timing requirement, at or before approval, still applies to electronic delivery.

Question 18Supervise the Opening of New Options Accounts

The options account agreement signed by the customer typically requires the customer to:

  1. Pay for every options transaction in full
  2. Comply with position limits and applicable options rules Correct answer.
  3. Reimburse the firm for losses on the customer's trades
  4. Grant the firm discretionary authority over the account

Explanation

The agreement documents the customer's undertaking to observe position and exercise limits and to comply with exchange and clearing corporation rules. It does not create discretion, guarantee full cash payment, or shift trading losses to the customer's own account obligations beyond normal settlement.

Question 19Supervise the Opening of New Options Accounts

Approval of an options account must rest on a determination that options trading is:

  1. Suitable given the customer's finances and objectives Correct answer.
  2. Covered by the firm's errors and omissions insurance policy
  3. Unlikely to generate written customer complaints
  4. Permitted by the customer's employer

Explanation

The principal must conclude that options trading, at the authorized level, is suitable in light of the customer's financial resources, investment objectives, and experience. Insurance coverage and complaint risk are not approval criteria.

Question 20Supervise the Opening of New Options Accounts

A branch office has no registered options principal stationed on site. How may options accounts be approved for that branch?

  1. They cannot be opened for that branch at all
  2. A designated ROP at another location may approve them Correct answer.
  3. The branch manager may approve them after reading the disclosure document
  4. The clearing firm's margin department may approve them

Explanation

Approval must be given by a registered options principal, but that principal need not be physically present in the branch. Firms commonly route accounts to a designated Series 4 principal who reviews the file and documents the approval.

Question 21Supervise the Opening of New Options Accounts

A 78-year-old retiree living on Social Security and a small pension wants to sell uncovered puts to generate income. The registered options principal's best action is to:

  1. Deny all options trading and terminate the customer relationship
  2. Approve the account and require the representative to warn the customer
  3. Restrict the approval to a level suited to the customer, or decline Correct answer.
  4. Approve at the requested level because the customer asked for it

Explanation

Uncovered put writing exposes the customer to substantial potential loss, which is difficult to reconcile with fixed-income retirement resources. The principal should approve only a level consistent with the customer's means and objectives, or decline the unsuitable request.

Question 22Supervise the Opening of New Options Accounts

Six months after approval, a customer tells the firm that he has lost his job and most of his savings. The registered options principal should:

  1. Liquidate all positions immediately without further review
  2. Take no action, because approval was valid when granted
  3. Transfer the account to a different representative
  4. Re-evaluate the account and restrict it as warranted Correct answer.

Explanation

Approval is not a permanent status; a material change in the customer's finances requires the principal to reassess suitability and adjust or curtail the authorized activity. The review should be documented and any restriction or liquidation handled in an orderly way.

Question 23Supervise the Opening of New Options Accounts

An account is approved only for covered call writing. The customer instructs the representative to buy 10 uncovered puts. The representative should:

  1. Enter the order and note the restriction on the ticket
  2. Enter the order if the customer signs a waiver
  3. Enter the order, because long puts carry limited risk
  4. Decline unless the account is re-approved for that level Correct answer.

Explanation

The authorized trading level defines what the representative may execute; activity outside that level requires a new review and approval by a registered options principal. A customer waiver or a ticket notation cannot expand the approval.

Question 24Supervise the Opening of New Options Accounts

A representative mails the disclosure document and obtains principal approval for an options account on May 1; the customer's first options trade is on May 3. Which statement is accurate?

  1. Improper, since the customer must wait 15 days after approval to trade
  2. Improper, since the customer must receive the document before approval
  3. Improper, since the signed agreement must be in hand before the first trade
  4. Proper, since delivery and approval both preceded the trade Correct answer.

Explanation

The rule requires delivery of the disclosure document at or before approval, and approval before the first options trade. Both conditions are satisfied here, and the signed agreement may follow within the 15-day window.

Question 25Supervise the Opening of New Options Accounts

The primary purpose of delivering the Options Disclosure Document to a new options customer is to:

  1. Authorize discretionary trading in the account
  2. Verify the customer's net worth and income
  3. Disclose the risks of standardized options Correct answer.
  4. Satisfy the margin agreement requirement

Explanation

The document gives the customer a written explanation of how standardized options work and the risks they carry. It does not verify financial data, confer discretion, or serve as a margin agreement.

Question 26Supervise the Opening of New Options Accounts

Two individuals open a joint options account with rights of survivorship. To complete the suitability determination, the firm must:

  1. average the two tenants' net worth and use the lower of their two incomes
  2. obtain information only from the tenant whose Social Security number appears first on the account
  3. consider only the information supplied by the tenant who will place the orders
  4. consider financial information for both tenants Correct answer.

Explanation

Each joint tenant is financially responsible for the account, so the firm must evaluate the resources and objectives of both parties before approving options trading. Relying on only one tenant understates the exposure of the other and gives the principal an incomplete suitability picture.

Question 27Supervise the Opening of New Options Accounts

An options disclosure document is revised to describe a new product feature. The firm should:

  1. deliver the revision only to customers who later trade the new feature
  2. hold the revision until each customer's account is next re-approved
  3. deliver the revision only to customers who request it in writing
  4. send the revised document to existing options customers Correct answer.

Explanation

When the options disclosure document is amended, the firm must distribute the updated document to customers who already have options accounts, not merely to new applicants. The disclosure obligation continues for the life of the options relationship.

Question 28Supervise the Opening of New Options Accounts

A trust wants to open an options account. In addition to the usual new account information, the firm should obtain:

  1. documents showing the trustee's authority to trade options Correct answer.
  2. a written guaranty from the trust's attorney
  3. a copy of the trustee's personal income tax return
  4. a resolution signed by the trust's beneficiaries

Explanation

The firm must verify that the person directing the account is authorized by the governing trust document to trade options on the trust's behalf. Without that evidence the firm cannot be assured the individual has power to bind the trust.

Question 29Supervise the Opening of New Options Accounts

An account is approved to buy options only. The customer wants to establish a debit spread by buying one option and writing another option of the same class. The representative should:

  1. obtain approval for the strategy before accepting the order Correct answer.
  2. enter the long leg first and submit the approval paperwork the next business day
  3. enter the order, because a debit spread is treated as a purchase
  4. enter the order, because the written leg is fully covered by the long leg

Explanation

Writing any option, even one offset by a long option, falls outside an approval limited to long purchases. The account must first be approved for the additional strategy and the approval documented before the order is taken.

Question 30Supervise the Opening of New Options Accounts

A customer wants to write uncovered calls in a self-directed IRA. The firm should:

  1. decline, since uncovered writing requires margin the IRA cannot provide Correct answer.
  2. approve, provided the customer pledges securities held in a separate taxable account
  3. approve, since an IRA may use every strategy available in a cash account
  4. approve, provided the customer signs a standard margin agreement

Explanation

Uncovered call writing can produce losses exceeding the account's equity, which requires margin capacity, and retirement accounts may not be margin accounts. Because that strategy cannot be supported, the request must be refused and only strategies the account can collateralize may be approved.

Question 31Supervise the Opening of New Options Accounts

After sending the options disclosure document to a new customer, the firm should:

  1. record the date and manner of delivery in the firm's records Correct answer.
  2. rely on the representative's oral confirmation to the principal
  3. wait for the customer to request a paper copy before noting delivery
  4. deliver a second copy with the customer's first confirmation statement

Explanation

The firm must be able to demonstrate that the disclosure document was provided, which requires a contemporaneous record of when and how it was sent. Oral assurances or unsupported recollections do not satisfy the supervisory obligation.

Question 32Supervise the Opening of New Options Accounts

An options application shows $2 million of net worth, but branch records show the customer has been unemployed for two years and the account holds $3,000. The registered options principal should:

  1. approve the account but restrict it to covered writing
  2. resolve the discrepancy with the customer before approving the account Correct answer.
  3. approve the account and simply note the discrepancies in the file
  4. approve the account, since the customer signed and certified the application

Explanation

The approval decision must rest on accurate financial information, and apparent inconsistencies require the principal to make reasonable inquiry before acting. Approving on unverified figures that the firm's own records contradict is inconsistent with the firm's supervisory duty.

Question 33Supervise the Opening of New Options Accounts

An investment adviser wants to open an options account for one of its clients under a limited power of attorney. The firm should:

  1. obtain the client's written authorization and approve the account Correct answer.
  2. approve the account on the basis of the adviser's own financial statements
  3. require the adviser to open the account in the adviser's own name instead
  4. rely on the adviser's own approval of the client as sufficient documentation

Explanation

The account belongs to the client, so the firm must obtain written evidence of the adviser's limited authority to trade and must approve that client's account on the client's own suitability information. A third party's approval or balance sheet does not substitute for the customer's authorization.

Question 34Supervise the Opening of New Options Accounts

A customer is transferring an options account from another broker-dealer and wants to continue trading immediately. The receiving firm should:

  1. accept orders, since the account was approved at the prior firm
  2. accept orders for 30 days while it completes its own review
  3. accept only closing transactions until the prior firm sends its approval records
  4. approve the account on its own before accepting an order Correct answer.

Explanation

Each firm must make and document its own suitability determination for options trading; another firm's approval has no binding effect. Orders may not be accepted until the receiving firm's principal has approved the account and the required disclosures have been provided.

Question 35Supervise Options Account Activities

Before a member firm accepts a customer's first options order, the account must be approved for options trading by:

  1. a Registered Options Principal or a designated qualified supervisor Correct answer.
  2. the firm's clearing broker, which executes the transaction
  3. any registered representative who passed the Series 7 examination
  4. the branch office manager, whether or not registered as a principal

Explanation

FINRA rules require the member to approve a customer's account for options trading before accepting any options order, and that approval must come from a Registered Options Principal or a qualified supervisor the firm has designated for that purpose. A general securities registration alone does not confer approval authority.

Question 36Supervise Options Account Activities

When must a member firm furnish the Options Disclosure Document to a new options customer?

  1. Once each calendar year following the account's initial approval
  2. Within ten business days after the first options trade is executed
  3. At or before the time the account is approved for options trading Correct answer.
  4. Only if the customer requests a copy in writing from the firm

Explanation

SEC Rule 9b-1 requires that the current Options Disclosure Document be delivered to the customer at or before the time the account is approved for options trading. Delivery after the first trade is too late.

Question 37Supervise Options Account Activities

A customer signs the firm's special options account agreement. Under FINRA rules, the signed agreement must be obtained no later than:

  1. the customer's next scheduled annual account review meeting
  2. fifteen days after the account is approved for options trading Correct answer.
  3. the close of business on the day the first order is entered
  4. thirty calendar days after the first options transaction

Explanation

The member must obtain the customer's signed options account agreement within 15 days after the account is approved for options trading. If the agreement is not obtained in that window, no further options orders may be accepted until it is.

Question 38Supervise Options Account Activities

FINRA rules require a member firm that transacts an options business to designate which of the following?

  1. A Senior Registered Options Principal to oversee options compliance Correct answer.
  2. An independent outside auditor to review each options account on a monthly basis
  3. A separate, dedicated compliance officer for every branch office that accepts options orders
  4. A staff options strategist to review and price all customer orders

Explanation

The firm must designate a Senior Registered Options Principal who is responsible for supervising the firm's options activities and for the overall options compliance function. This person must hold the appropriate options principal registration.

Question 39Supervise Options Account Activities

Which statement about approving a customer's account for options trading is accurate?

  1. Approval is needed only if the firm recommends the strategy
  2. Approval can wait until the customer has completed a margin transaction
  3. Unsolicited orders may be accepted while approval is still pending
  4. Approval is required even for an unsolicited first order Correct answer.

Explanation

The account approval requirement applies to every options order, whether solicited or unsolicited. A firm may not accept even a customer-directed first order before the account has been approved for options.

Question 40Supervise Options Account Activities

Written customer complaints concerning options trading must be:

  1. destroyed after the representative resolves the matter informally
  2. recorded and retained for at least four years Correct answer.
  3. forwarded to the OCC before any internal review begins
  4. kept only if the customer threatens formal legal action

Explanation

FINRA rules require that written customer complaints be recorded, including the customer's name, the date received, and the nature of the complaint, and be preserved for at least four years. Informal resolution by the representative does not relieve the firm of this obligation.

Question 41Supervise Options Account Activities

Before a firm may exercise discretion in a customer's options account, it must:

  1. obtain written approval from the OCC before exercising any discretion in the account
  2. have prior written authorization and the required account approval Correct answer.
  3. wait until the account has been open and active for at least six months
  4. limit discretionary orders to covered call writing and protective puts

Explanation

Discretionary authority in an options account requires the customer's prior written authorization, such as a power of attorney, along with approval of the account for options trading and acceptance of the arrangement under the firm's supervisory procedures.

Question 42Supervise Options Account Activities

In deciding whether to approve a customer for options trading, the firm should consider the customer's:

  1. financial situation, objectives, and options experience Correct answer.
  2. age, marital status, and the number of dependents in the household
  3. length of employment and salary history at the member firm
  4. credit score, mortgage balance, and prior year tax bracket

Explanation

Account approval rests on a suitability determination that weighs the customer's financial resources, investment objectives, investment experience, and other relevant facts. This information must be documented and updated when circumstances change.

Question 43Supervise Options Account Activities

A retiree living on a fixed income wants to write uncovered puts to generate premium. The most appropriate supervisory response is to:

  1. decline the recommendation as unsuitable Correct answer.
  2. approve it once the customer signs a risk disclosure
  3. approve it if cash equal to the strike is deposited
  4. approve it since uncovered writing produces income

Explanation

Uncovered writing carries potential loss far beyond the premium received, and a customer with limited fixed resources generally lacks the capacity to absorb that exposure. A signed risk disclosure or a cash deposit does not cure an unsuitable recommendation.

Question 44Supervise Options Account Activities

The standard position limit for most equity option classes is:

  1. Unlimited, so long as the firm monitors its exposure
  2. 25,000 contracts on the same side of the market Correct answer.
  3. 250,000 contracts on the same side of the market
  4. 2,500 contracts on the same side of the market

Explanation

The standard limit for most equity option classes is 25,000 contracts per underlying on the same side of the market. Certain classes carry different limits, which the firm must track when approving orders.

Question 45Supervise Options Account Activities

For position limit purposes, which pair of positions is treated as being on the same side of the market?

  1. Long calls and short calls
  2. Long calls and short puts Correct answer.
  3. Long calls and long puts
  4. Short calls and long puts

Explanation

Positions are grouped by the direction of market exposure: long calls and short puts both benefit from rising prices and are counted on the same side. Short calls and long puts form the opposite side of the market.

Question 46Supervise Options Account Activities

A firm intending to rely on the bona fide hedge exemption from position limits must first:

  1. limit the hedge to options of the same expiration series
  2. file a daily hedging notice with the exchange in advance
  3. obtain a written waiver from the OCC for each hedging transaction
  4. have written procedures and records supporting the hedge Correct answer.

Explanation

Reliance on the hedge exemption requires the member to have written procedures governing its use and to maintain records demonstrating that the positions are bona fide hedges. Documentation is what allows the firm to defend the exemption on examination.

Question 47Supervise Options Account Activities

Options sales literature prepared for customer distribution must be:

  1. approved in advance by a qualified registered principal Correct answer.
  2. approved by the clearing firm that carries the accounts
  3. filed with FINRA before it is shown to any retail customer
  4. reviewed by the representative who created the material

Explanation

Communications with the public must be approved before use by a registered principal, and the firm's procedures must ensure options-related material receives the appropriate options principal review. The preparer cannot serve as the approver.

Question 48Supervise Options Account Activities

Supervisory procedures should require that customers holding expiring in-the-money options are:

  1. reported to FINRA as potential position limit violations before expiration
  2. required to submit written exercise instructions by the preceding Friday
  3. advised of exercise-by-exception and the risk of unwanted exercise Correct answer.
  4. automatically closed out two business days before expiration by the firm

Explanation

The OCC exercises expiring options that are in the money by at least one cent unless the holder instructs otherwise, so firms must alert customers to exercise-by-exception and to the risk of an unwanted exercise or assignment. This is a core element of expiration supervision.

Question 49Supervise Options Account Activities

A customer whose account is approved only for covered call writing asks to buy speculative calls. The firm should:

  1. enter the order, because the account is already approved for options trading
  2. enter the order and upgrade the approved level retroactively at the next review
  3. refuse the order permanently, because an account's approved level cannot be changed
  4. re-evaluate and approve the broader level before accepting the order Correct answer.

Explanation

Approval is granted for a defined level of options activity, and a strategy outside that level requires a fresh review and documented approval. Entering the order first would mean trading outside the approved scope and retroactive approval is not permitted.

Question 50Supervise Options Account Activities

When a customer grants another person trading authority over an options account, the firm must:

  1. bar the arrangement unless the third party is a registered representative
  2. obtain prior approval from the OCC for the arrangement
  3. treat the third party as the customer for suitability purposes
  4. obtain written authorization and keep the options approval current Correct answer.

Explanation

Third-party trading authority requires a written authorization acceptable to the firm, and the account must still be approved for options trading based on the customer's profile. Authority granted by the customer does not eliminate the firm's suitability and supervisory obligations.