Series 4

What Is the Series 4?

The Series 4 is an exam and securities license qualifying the holder for direct options sales faculty and compliance issues. It covers themes like options strategies, foreign exchange options and taxation. Before taking the Series 4 Exam, a candidate must have a Series 7 license.

Figuring out the Series 4

The Series 4 Exam, otherwise called the Registered Options Principal Qualification Examination (OP), is administered by the Financial Industry Regulatory Authority (FINRA). It "surveys the skill of a section level options principal candidate to perform their job as a registered options principal," as indicated by FINRA. All the more relevantly, it centers around "the rules and statutory provisions applicable to the supervisory management of a company's options work force, accounts and trading, as well as exchange rules and regulations applicable to the trading of options contracts."

Covered supervisory activities under the Series 4 incorporate market making, underwriting, regulatory compliance over trading, and advertising of:

Equity options
Foreign currency options
Interest rate options
Index options
Options on government and mortgage-backed securities

Series 4 Exam Structure and Content

The Series 4 Exam is led by computer. An instructional exercise on the most proficient method to take the exam by computer gave before the exam. Candidates aren't permitted any reference material, yet are given scratch paper and fundamental electronic mini-computers (a portion of the exam's inquiries might include estimations).

The Exam comprises of 125 different decision questions (10 of which are unscored and arbitrarily distributed all through the test) in six substance areas:

Job Function 1: Supervise the Opening of New Options Accounts (21 inquiries)
Job Function 2: Supervise Options Account Activities (25 inquiries)
Job Function 3: Supervise General Options Trading (30 inquiries)
Job Function 4: Supervise Options Communications (9 inquiries)
Job Function 5: Implement Practices and Adhere to Regulatory Requirements (12 inquiries)
Job Function 6: Supervise Associated Persons and Personnel Management Activities (28 inquiries)

Series 4 candidates have three hours and 25 minutes to complete the test. A score of 72% is required to pass. There is no penalty for speculating so a candidate ought to respond to each question. For more data on the test, see FINRA's Registered Options Principal Qualification Examination (OP) Series 4 Content Outline.

Series 4 Sample Questions

These examples, given by FINRA, address common inquiry types and subject matter. A mark means the right response.

Example 1: With a broad-based index at 266, a customer composes 1 Feb 270 index call at 2.75, composes 1 Feb 260 put at 2.25, purchases 1 Feb 275 call at 1.25 and purchases 1 Feb 255 put at 1. What is the maximum likely profit here?

(A) $225

(B) $275*

(D) $725

Example 2: A put is viewed as out-of-the-cash when the market price of the underlying security is:

(A) equivalent to or higher than the strike price.*

(B) lower than the strike price.

(D) higher than the strike price less the premium.

Example 3: Listed equity options couldn't be adjusted for which of the accompanying activities in the underlying security?

(A) A 2-for-1 stock split

(B) A 1-for-5 reverse stock split

(D) A cash dividend of $0.50*

Features

The Series 4 exam awards license to the individuals who pass to manage options sales and trading staff.
The test is sponsored by FINRA and covers both meaningful information about options trading as well as points on compliance and ethics.
A Series 4 will frequently be taken solely after an individual has proactively passed the Series 6 or 7 exams.