Series 9 cheat sheet

Before the first options trade, a registered options principal or qualified supervisor must approve the customer's options account in writing.

Options account approval requires documented financial information, investment objectives, trading experience, and risk tolerance on the new account record.

Deliver the current OCC Characteristics and Risks of Standardized Options disclosure document at or before account approval, and document delivery.

Review and, when required, reapprove the account after a material change in the customer's financial status, objectives, or trading authority.

Discretionary options authority requires a written power of attorney, customer signature, and principal approval before any discretionary order.

Uncovered short option positions and complex strategies require a higher approval level and margin capacity than long options.

Position and exercise limits are aggregated across accounts under common control; monitor for limit breaches before accepting orders.

Options account agreements must identify authorized traders and cannot be changed without customer authorization and firm approval.

Enhanced review is expected for senior investors, concentrated positions, and speculative strategies, with escalation documented when suitability concerns arise.

Options recommendations must satisfy Reg BI care, disclosure, conflict-of-interest, and compliance obligations, including reasonable-basis and customer-specific suitability.

Prohibited practices include guaranteeing against loss, sharing customer profits or losses, unauthorized trading, churning, and misleading representations about options.

Short calls carry early assignment risk, especially before ex-dividend dates; short puts carry assignment risk when deep in the money.

American-style options may be exercised any time before expiration; European-style options may be exercised only at expiration.

Confirm exercise and do-not-exercise instructions by the firm's daily cutoff; unresolved in-the-money positions may be automatically exercised.

Best execution applies to options orders and requires evaluation of price, size, speed, and venue characteristics, not merely the NBBO at entry.

Position and exercise limits apply on the same side of the market and are aggregated with controlled accounts.

Options trade errors and customer complaints must be escalated, documented, and corrected under firm procedures; concealment is prohibited.

Principal review of options order tickets and exception reports helps detect unauthorized trading, excessive activity, and limit breaches.

All options communications must be fair and balanced, with risks given prominence comparable to benefits.

Options-related retail communications generally require approval by a registered options principal or qualified principal before use.

Communications may not state or imply that options are suitable for all investors or that losses are impossible.

Hypothetical performance and projections must be clearly labeled, based on reasonable assumptions, and disclose material limitations.

Testimonials about options results must disclose that the experience is not typical and does not predict future performance.

Retain communications and principal approvals for at least three years, with the first two years in an easily accessible place.

Social media and electronic communications used for options business are supervised under the same content, approval, and recordkeeping standards.

Communications must disclose material commissions, fees, spreads, and the risk of losing the entire premium.

Terms such as safe, guaranteed, or risk-free may not be used to describe options unless factual and balanced disclosure prevents misleading investors.

Form U4 must be accurate and promptly amended for material changes, disclosure events, and customer complaints.

Statutory disqualification bars registration unless FINRA grants eligibility; screen applicants before hiring or registration.

Fingerprint employees whose duties involve securities activities as required by SEA Rule 17f-2 and firm procedures, and retain records.

Written supervisory procedures must assign supervisory responsibility and include escalation and review steps for options activities.

Continuing education includes the annual Regulatory Element and Firm Element; track completion for all registered persons.

Branch office inspections occur on a regular cycle and review options sales, account approvals, communications, and supervisory records.

Outside business activities and private securities transactions require prior written notice and firm approval.

Form U5 must be filed promptly after termination and amended for post-termination disclosure events.

Gifts and entertainment are subject to firm limits and preapproval; no gift or benefit may improperly influence customer recommendations.

Before the first options trade, a registered options principal or qualified supervisor must approve the customer's options account in writing.

Options account approval requires documented financial information, investment objectives, trading experience, and risk tolerance on the new account record.

Deliver the current OCC Characteristics and Risks of Standardized Options disclosure document at or before account approval, and document delivery.

Review and, when required, reapprove the account after a material change in the customer's financial status, objectives, or trading authority.

Discretionary options authority requires a written power of attorney, customer signature, and principal approval before any discretionary order.

Uncovered short option positions and complex strategies require a higher approval level and margin capacity than long options.

Position and exercise limits are aggregated across accounts under common control; monitor for limit breaches before accepting orders.

Options account agreements must identify authorized traders and cannot be changed without customer authorization and firm approval.

Enhanced review is expected for senior investors, concentrated positions, and speculative strategies, with escalation documented when suitability concerns arise.

Options recommendations must satisfy Reg BI care, disclosure, conflict-of-interest, and compliance obligations, including reasonable-basis and customer-specific suitability.

Prohibited practices include guaranteeing against loss, sharing customer profits or losses, unauthorized trading, churning, and misleading representations about options.

Short calls carry early assignment risk, especially before ex-dividend dates; short puts carry assignment risk when deep in the money.

American-style options may be exercised any time before expiration; European-style options may be exercised only at expiration.

Confirm exercise and do-not-exercise instructions by the firm's daily cutoff; unresolved in-the-money positions may be automatically exercised.

Best execution applies to options orders and requires evaluation of price, size, speed, and venue characteristics, not merely the NBBO at entry.

Position and exercise limits apply on the same side of the market and are aggregated with controlled accounts.

Options trade errors and customer complaints must be escalated, documented, and corrected under firm procedures; concealment is prohibited.

Principal review of options order tickets and exception reports helps detect unauthorized trading, excessive activity, and limit breaches.

All options communications must be fair and balanced, with risks given prominence comparable to benefits.

Options-related retail communications generally require approval by a registered options principal or qualified principal before use.

Communications may not state or imply that options are suitable for all investors or that losses are impossible.

Hypothetical performance and projections must be clearly labeled, based on reasonable assumptions, and disclose material limitations.

Testimonials about options results must disclose that the experience is not typical and does not predict future performance.

Retain communications and principal approvals for at least three years, with the first two years in an easily accessible place.

Social media and electronic communications used for options business are supervised under the same content, approval, and recordkeeping standards.

Communications must disclose material commissions, fees, spreads, and the risk of losing the entire premium.

Terms such as safe, guaranteed, or risk-free may not be used to describe options unless factual and balanced disclosure prevents misleading investors.

Form U4 must be accurate and promptly amended for material changes, disclosure events, and customer complaints.

Statutory disqualification bars registration unless FINRA grants eligibility; screen applicants before hiring or registration.

Fingerprint employees whose duties involve securities activities as required by SEA Rule 17f-2 and firm procedures, and retain records.

Written supervisory procedures must assign supervisory responsibility and include escalation and review steps for options activities.

Continuing education includes the annual Regulatory Element and Firm Element; track completion for all registered persons.

Branch office inspections occur on a regular cycle and review options sales, account approvals, communications, and supervisory records.

Outside business activities and private securities transactions require prior written notice and firm approval.

Form U5 must be filed promptly after termination and amended for post-termination disclosure events.

Gifts and entertainment are subject to firm limits and preapproval; no gift or benefit may improperly influence customer recommendations.