Supervising Options Communications
Approval before use
Options-related retail communications must be approved in writing by a Registered Options Principal before they are used, and a copy must be retained. A registered representative may not approve their own material, and a principal without the Series 4 registration cannot clear options content. Correspondence - individual, unsolicited communications to a single customer - is reviewed after the fact under the firm's procedures rather than pre-approved.
Standards of fairness
Every options communication must be fair and balanced: benefits presented alongside the risk of loss, including the risk of losing the entire premium and, for uncovered writing, losses beyond the premium. Prohibited or heavily restricted content includes guarantees against loss, predictions of specific results, hedge clauses that disclaim responsibility, misleading use of terms like "safe," "conservative," or "free," and testimonials without disclosure of any compensation paid. Performance figures must be net of commissions, fees, and other costs, must cover the required time period, and hypothetical or projected results must carry prominent caveats.
Consistency with the disclosure document
Options marketing must not contradict the Characteristics and Risks of Standardized Options. It must not imply options suit every investor, and it may not present a strategy as riskless by pointing to the offsetting position without addressing execution, assignment, and margin risk.
Traps
Boilerplate risk language pasted at the bottom does not cure a headline that emphasizes reward only. Internal training decks and seminar scripts can be retail communications. Recommendations in a communication are subject to Reg BI and suitability standards, not just advertising rules.
Worked example
A rep drafts an email touting a "95% win rate" covered-call program. It cannot be approved: past performance is presented gross of costs, the risk of stock decline is omitted, and the implication of near-certainty is a guarantee by another name.