Series 4

What is a 'Series 4'

The Series 4 is an exam and securities license entitling the holder to supervise options sales personnel and compliance issues. It covers topics such as options strategies, foreign exchange options and taxation. Before taking the Series 4 Exam, a candidate must have a Series 7 license.

Breaking Down 'Series 4'

The Series 4 Exam, also known as the Registered Options Principal Qualification Examination (OP), is administered by the Financial Industry Regulatory Authority (FINRA). It "assesses the competency of an entry-level options principal candidate to perform his or her job as a registered options principal," according to FINRA. More pertinently, it focuses on "the rules and statutory provisions applicable to the supervisory management of a firm’s options personnel, accounts and trading, as well as exchange rules and regulations applicable to the trading of options contracts."

Covered supervisory activities under the Series 4 include 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 consists of 135 multiple-choice questions (10 of which are unscored and randomly distributed throughout the test) in six content areas:

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

Series 4 candidates have three hours and 15 minutes to complete the test. A score of 72% is required to pass. There is no penalty for guessing so a candidate should answer every question. For more information on the test, see FINRA's Registered Options Principal Qualification Examination (OP) Series 4 Content Outline.

Series 4 Taking the Exam

The Series 4 Exam is conducted by computer. A tutorial on how to take the exam by computer provided before the exam. Candidates aren't allowed any reference material, but are given scratch paper and basic electronic calculators (some of the exam's questions may involve calculations).

Series 4 Sample Questions