WILEY SERIES 4 EXAM REVIEW 2017 The Registered Options Principal Examination 1st edition by Wiley – Ebook PDF Instant Download/Delivery: 1119379805, 978-1119379805
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Product details:
ISBN 10: 1119379805
ISBN 13: 978-1119379805
Author: Wiley
The go-to guide to acing the Series 4 Exam!
The Registered Options Principal Qualification Examination (Series 4) was designed to test a candidate’s knowledge of the rules and statutory provisions applicable to the supervisory management of a firm’s options personnel and options accounts. After passing the exam, a registered person may supervise a FINRA member firm’s options business and is qualified to oversee trades on all forms of options, from equity options to foreign currency options to options on government and mortgage-backed securities. The subject areas covered in the exam are: Options Investment Strategies; Supervision of Sales Activities and Trading Practices; Supervision of Employees, Business Conduct; and Recordkeeping and Reporting Requirements.
Created by the experts at the Securities Institute of America, Inc., Wiley Series 4 Exam Review 2017 arms you with what you need to score high on the test. Designed to let you build and fine-tune your knowledge of all areas covered in the exam and to guarantee that you’re prepared mentally and strategically to take the test, it provides:
- Dozens of examples
- Assorted practice questions for each subject area covered in the exam
- Priceless test-taking tips and strategies
- Helpful hints on how to study for the test, manage stress, and stay focused
Wiley Series 4 Exam Review 2017 is your ticket to passing the Series 4 test on the first try—with flying colors!
WILEY SERIES 4 EXAM REVIEW 2017 The Registered Options Principal Examination 1st Table of contents:
ABOUT THE SERIES 4 EXAM xiii
ABOUT THIS BOOK xvii
ABOUT THE TEST BANK xix
ABOUT THE SECURITIES INSTITUTE OF AMERICA xxi
CHAPTER 1 OPTION BASICS 1
Option Classification 1
Option Classes 2
Option Series 2
Bullish vs. Bearish 2
Possible Outcomes for an Option 3
Characteristics of All Options 4
Managing an Option Position 4
Buying Calls 5
Selling Calls 6
Buying Puts 8
Selling Puts 9
Option Premiums 11
Intrinsic Value and Time Value 13
Pretest 15
CHAPTER 2 OPTION STRATEGIES 19
Using Options as a Hedge 19
Long Stock Long Puts/Married Puts 19
Long Stock Short Calls/Covered Calls 22
Ratio Call Writing 24
Short Stock Long Calls 24
Short Stock Short Puts 27
Multiple Option Positions and Strategies 29
Long Straddles 29
Short Straddles 32
Selling a Straddle Against Long Stock 34
Spreads 35
Analyzing Spreads/Price Spreads 36
Bull Call Spreads/Debit Call Spreads 37
Spread Premiums Bull Call Spread 38
Bear Call Spreads/Credit Call Spreads 39
Spread Premiums Bear Call Spread 41
Bear Put Spreads/Debit Put Spreads 41
Spread Premiums Bear Put Spread 43
Bull Put Spreads/Credit Put Spreads 43
Spread Premiums Bull Put Spread 45
Condor Spreads 47
Combinations 49
Collars 49
Synthetic Risk and Reward 50
Using a T Chart to Evaluate Option Positions 51
Pretest 57
CHAPTER 3 INDEX, INTEREST RATE, AND CURRENCY OPTIONS 61
Index Option Settlement 61
Exercising an Index Option 62
Index Option Positions 63
Capped Index Options 63
Interest Rate Options 64
Price-Based Options 64
Premiums Price-Based Options Treasury Notes and Bonds 64
Premiums Price-Based Options Treasury Bills 65
Rate-Based Options 65
Currency Markets 66
Spot Rates 66
Foreign Currency Options 67
Foreign Currency Option Basics 67
Buying Foreign Currency Calls and Puts 68
Market Volatility Options/VIX 69
Flex Options 70
Weekly Options 71
Binary Options 71
Mini Options 72
Pretest 73
CHAPTER 4 THE OPTIONS MARKETPLACE 77
The Option Clearing Corporation 77
The Options Markets 78
The Chicago Board Option Exchange 79
Direct Market Access 81
Opening and Closing Option Prices 82
Fast Markets and Trading Halts 82
Order Execution 83
Types of Orders 83
Priority of Option Orders 86
Trade Reporting 86
Clearly Erroneous Reports 87
Execution Errors 87
Option Order Tickets 88
Cabinet Trade/Accommodation Trade 89
Expiration and Exercise 89
American vs. European Exercise 89
Position and Exercise Limits 90
Stock Splits and Stock Dividends 91
Reverse Stock Split 92
Pretest 93
CHAPTER 5 OPTION TAXATION AND MARGIN REQUIREMENTS 97
Taxation of Options 97
Closing an Option Position 98
Exercising a Call 98
Exercising a Put 99
Protective Puts 99
Covered Calls 99
Establishing a Long Position in a Margin Account 100
An Increase in the Long Market Value 101
Special Memorandum Account/SMA Long Margin Account 102
A Decrease in the Long Market Value 104
Minimum Equity Requirement Long Margin Accounts 105
Establishing a Short Position in a Margin Account 106
A Decrease in the Short Market Value 107
Special Memorandum Account (SMA) Short Margin Account 107
An Increase in the Short Market Value 108
Minimum Equity Requirement Short Margin Accounts 109
Combined Margin Accounts 110
Option Contract Margin Requirements 111
Margin Requirements when Exercising a Call 111
Margin Requirements when Exercising a Put 112
Margin Requirements when Writing a Call 112
Margin Requirements Uncovered Call 113
Margin Requirements when Writing a Put 115
Margin Requirements Uncovered Puts 115
Margin Requirements when Establishing a Call Spread 117
Margin Requirements when Establishing a Put Spread 120
Short Straddle Margin Requirements 123
Short Combination Margin Requirements 123
Short Index Option Margin Requirements 124
Short Currency Option Margin Requirements 127
Pretest 131
CHAPTER 6 OPTION COMPLIANCE AND ACCOUNT SUPERVISION 135
Duties of the ROP/ROSFP 135
Additional Duties of the ROP/ROSFP 136
Option Account Compliance 137
Option Agreement 139
Option Account Supervision 139
Large Option Position Reporting Requirements 141
Operating a Discretionary Account 142
Managing Discretionary Accounts 143
Customer Confirmations and Account Statements 143
Mailing Instructions 144
Account Transfer 144
Missing and Lost Securities 146
Customer Complaints 147
Trade Complaints Between Members 147
Broker Dealers on the Premises of Other Financial Institutions 148
Regulation S-P 149
Communications with the Public 150
FINRA Rule 2210 Communications with the Public 151
Pretest 155
CHAPTER 7 SECURITIES INDUSTRY RULES AND REGULATIONS 159
The Securities Act of 1933 159
The Prospectus 160
Tombstone Ads 161
Free Riding and Withholding/FINRA Rule 5130 161
The Final Prospectus 163
Prospectus to Be Provided to Aftermarket Purchasers 164
SEC Disclaimer 164
Misrepresentations 164
Private Placements/Regulation D Offerings 165
Rule 144 166
The Securities Exchange Act of 1934 167
The Securities Exchange Commission/SEC 168
Extension of Credit 168
Margin Accounts 169
Guaranteeing a Customer’s Account 170
Day Trading Accounts 170
Portfolio Margin Accounts 171
Securities Backed Lines of Credit 172
Minimum Margin for Leveraged ETFs 172
Commingling Customers’ Pledged Securities 172
Member Offices 173
Annual Compliance Review 175
Business Continuity Plan 175
Currency Transactions 176
The Patriot Act 176
U.S. Accounts 178
Foreign Accounts 178
Securities Investor Protection Corporation Act of 1970 (SIPC) 178
Customer Coverage 178
The Insider Trading and Securities Fraud Enforcement Act of 1988 179
Firewall 180
Trading Suspensions 180
Issuers Repurchasing their Own Securities 181
Tender Offers 182
Stockholders Owning 5 Percent of an Issuer’s Equity Securities 183
Short Sales 184
Affirmative Determination 184
Regulation SHO 185
Rule 200 Definitions and Order Marking 185
Rule 203 Security Borrowing and Delivery Requirements 186
Threshold Securities 187
Market Making During Syndication 188
Regulation M, Rule 101 188
Penalty Bids 189
Regulation M, Rule 102 189
Regulation M, Rule 103 190
Passive Market Maker’s Daily Purchase Limit 190
Regulation M, Rule 104 191
Syndicate Short Positions 192
Regulation M, Rule 105 192
Issuing Research Reports 192
Research Reports Required Disclosures 194
Regulation FD Fair Disclosure 195
Customer Accounts 196
Subsidiary (Secondary) Records 197
Securities Position Book (Ledger) Stock Record 197
Order Tickets 197
Confirmations and Notices 197
Monthly Trial Balances and Net Capital Computations 197
Employment Applications 198
Records Required to Be Maintained for Three Years 198
Records Required to Be Maintained for Six Years 198
Records Required to Be Maintained for the Life of the Firm 199
Other Record Retention Requirements 199
Hiring New Employees 199
Resignation of a Registered Representative 200
Registration Exemptions 201
Persons Ineligible to Register 202
Disciplinary Actions Against a Registered Representative 203
Termination for Cause 204
CBOE Trading Permit Holders and TPH Organizations 204
Outside Employment 205
Private Securities Transactions 205
Gift Rule 205
Sharing in a Customer’s Account 206
Accounts for Employees of Other Broker Dealers 207
Borrowing and Lending Money 207
Customer Complaints 208
Mediation 208
Code of Arbitration 209
The Arbitration Process 209
Simplified Arbitration 210
Larger Disputes 210
Awards Under Arbitration 210
Investor Information 211
Violations and Complaints 211
Resolution of Allegations 211
Minor Rule Violation 212
Firm Element Continuing Education 213
Regulatory Element 213
Circuit Breakers 214
Limit up Limit down (LULD) 214
Pretest 217
ANSWER KEYS 221
GLOSSARY OF EXAM TERMS 227
INDEX 293
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