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FINRA Options and Derivatives Flashcards

6 cards from real FINRA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 FINRA Options and Derivatives flashcards as text

  1. Which FINRA-related exam qualifies a registered representative to sell options to retail customers?

    Answer: Series 7 with options approval

    Passing the Series 7 (General Securities Representative) exam and receiving options approval from the firm qualifies a representative to sell options to retail customers.

  2. What is a 'call option' in securities trading?

    Answer: A contract giving the buyer the right to purchase a security at a specified price before expiration

    A call option grants the holder the right, but not the obligation, to buy the underlying security at the strike price on or before the expiration date.

  3. A 'put option' gives the buyer the right to:

    Answer: Sell the underlying security at the strike price before expiration

    A put option grants the holder the right, but not the obligation, to sell the underlying security at the strike price on or before the expiration date.

  4. What does it mean when an option is 'in the money' (ITM)?

    Answer: The option has intrinsic value — exercising it now would be profitable

    An option is in the money when exercising it immediately would result in a profit, meaning it has intrinsic value (e.g., a call when stock price > strike price).

  5. What is the 'premium' of an options contract?

    Answer: The price paid by the buyer to the seller for the rights granted by the option

    The premium is the market price of the option contract, representing what the buyer pays the seller for the rights conveyed.

  6. The Options Clearing Corporation (OCC) serves what function in the US options market?

    Answer: Acts as the central counterparty guaranteeing performance of all listed options contracts

    The OCC acts as issuer and guarantor for all US-listed options contracts, ensuring that obligations are fulfilled even if one party defaults.

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Sources & references

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  1. finra.org — Renewal, score validity, test dates, test delivery, eligibility, fees, exam format, passing score, score release, time limit · verified Oct 2026