FINRA FINRA Options and Derivatives

Question 1

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

Accepted Answer

Series 7 with options approval

Answer

Series 4

Answer

Series 3

Answer

Series 34

Question 2

What is a 'call option' in securities trading?

Accepted Answer

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

Answer

A contract giving the buyer the right to sell a security at a specified price

Answer

An obligation to buy a security at the current market price

Answer

A directive from a broker to buy securities immediately

Question 3

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

Accepted Answer

Sell the underlying security at the strike price before expiration

Answer

Buy the underlying security at the strike price before expiration

Answer

Receive dividends on the underlying security

Answer

Force the seller to deliver securities immediately

Question 4

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

Accepted Answer

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

Answer

The option has not yet expired

Answer

The premium paid has been recovered

Answer

The option's time value exceeds its premium

Question 5

What is the 'premium' of an options contract?

Accepted Answer

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

Answer

The strike price of the option

Answer

The difference between the stock price and the strike price

Answer

The margin required to write an option

Question 6

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

Accepted Answer

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

Answer

Sets margin requirements for options traders

Answer

Issues options contracts to broker-dealers

Answer

Regulates options advertising and sales practices