Series 4 Syllabus — Blueprint & Learning Objectives

This syllabus is based on FINRA’s official Series 4 Content Outline (6 major job functions). Use it as a checklist: practice “supervisor decisions” until you can choose the safest compliant action quickly.

What’s covered

• F1 — Supervise the Opening of New Options Accounts (16.8%)
• F2 — Supervise Options Account Activities (20%)
• F3 — Supervise General Options Trading (24%)
• F4 — Supervise Options Communications (7.2%)
• F5 — Implement Practices and Adhere to Regulatory Requirements (9.6%)
• F6 — Supervise Associated Persons and Personnel Management Activities (22.4%)

F1 — Supervise the Opening of New Options Accounts (16.8%)

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Review new account documentation for completeness

• Differentiate classifications of customers (e.g., institutional vs retail) and recognize how customer type affects account opening supervision (high level).
• Identify common account types (e.g., IRA, trust, fiduciary/entity) and the operational implications of each (high level).
• Verify documentation requirements for each account type and identify missing or inconsistent records (high level).
• Apply AML program expectations during onboarding and escalate suspicious patterns or documentation gaps (high level).
• Apply Customer Identification Program (CIP) identity verification concepts during account opening (high level).
• Apply due diligence and Know Your Customer (KYC) concepts to ensure account records support appropriate options approval levels (high level).
• Document approvals and ensure the account is not activated for options trading until required documentation is complete (high level).

Verify proper disclosures are provided to customers within required timeframe

• Apply Options Disclosure Document (ODD) delivery requirements and timing expectations for new options accounts (high level).
• Recognize ODD supplements and when supplemental disclosure delivery may be required (high level).
• Recognize written procedure requirements for business in uncovered options contracts and why controls are required (high level).
• Apply margin disclosure concepts and recognize when credit terms and margin-related disclosures must be provided (high level).
• Recognize day-trading risk disclosure statement concepts and when they may be required (high level).
• Recognize portfolio margin disclosure and acknowledgement concepts and when portfolio margin onboarding controls apply (high level).
• Recognize privacy disclosure themes (Reg S-P) connected to account opening and information safeguarding (high level).
• Document disclosure delivery and retain evidence of delivery/acknowledgement consistent with WSPs (high level).

Review customers’ trading objectives and evaluate risk levels to determine if account approval meets applicable standards

• Identify common options programs and trading strategies and the typical risk level associated with each (high level).
• Evaluate customer trading objectives and risk tolerance to determine appropriate options approval levels (high level).
• Apply minimum net equity concepts used in approving uncovered options accounts (high level).
• Use new account information (experience, objectives, financial profile) to set/confirm option strategy approval levels (high level).
• Recognize when a requested strategy exceeds the customer’s approval level and the appropriate supervisory response (high level).
• Document account approval decisions and required supervisory approvals (high level).

Review customer verification and confirm receipt of signed options agreement

• Verify customer background and financial information and identify inconsistencies requiring follow-up (high level).
• Confirm receipt of a signed options agreement and other required agreements prior to approving options trading (high level).
• Recognize authorization requirements for discretionary handling of customer options accounts (high level).
• Apply discretionary account approval and review requirements and identify when periodic reviews are required (high level).
• Recognize approval requirements for opening options accounts and ensure approvals are performed by qualified principals (high level).
• Recognize SEC/NYSE discretionary account concept themes and why discretion requires heightened controls (high level).
• Retain verification and agreement records consistent with recordkeeping requirements (high level).

F2 — Supervise Options Account Activities (20%)

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Review recommendations to determine if strategies meet applicable standards

• Apply best interest and suitability obligations to options recommendations and supervision decisions (high level).
• Supervise registered persons’ options sales activity and identify patterns that require heightened review (high level).
• Review whether the use of options is consistent with the customer profile and approved options level (high level).
• Evaluate investment strategies and inherent risks in common options transactions (covered vs uncovered, spreads, combinations) at a principal level (high level).
• Confirm strategies align with the customer’s stated objectives and risk tolerance and take corrective action when misaligned (high level).
• Monitor position and exercise limits that can constrain customer activity and apply restrictions/escalation when limits are approached or exceeded (high level).
• Document supervisory reviews and approvals for options recommendations and strategy changes (high level).
• Recognize when an exception requires escalation to compliance, risk, or senior supervision (high level).

Review margin accounts to confirm proper handling and timely adherence to margin requirements

• Explain margin implications associated with common options strategies (writing, spreads, combinations) at a high level.
• Apply initial and maintenance margin requirement concepts under Regulation T and FINRA margin rules (high level).
• Interpret mark-to-market concepts and how daily value changes affect margin requirements (high level).
• Perform or validate margin calculation concepts for options positions and identify when a margin call is required (high level).
• Supervise margin call issuance, timing, documentation, and follow-up actions when margin is not met (high level).
• Differentiate portfolio margin from strategy-based margin and recognize portfolio margin approval/disclosure requirements (high level).
• Escalate high-risk margin situations (concentration, uncovered risk, repeated calls) consistent with WSPs (high level).
• Retain margin disclosures and margin supervision records consistent with firm policies (high level).

Review risk exposure of customers’ accounts

• Calculate or interpret profit, loss, and breakeven points for common options strategies at an exam level (calls, puts, covered call, protective put, and spreads).
• Assess account risk exposure given positions, leverage, and margin and identify accounts requiring heightened supervision (high level).
• Recognize tax implication themes of options transactions at a high level and when to escalate for specialized guidance (high level).
• Recognize how tender offers can impact customer positions and required processing/supervision steps (high level).
• Recognize contract adjustment concepts for corporate actions (splits, mergers, dividends) and ensure positions are updated correctly (high level).
• Identify when corporate actions or adjustment events require customer communications and escalation to clearing/operations (high level).
• Document risk reviews and corrective actions taken on customer accounts (high level).

Receive and investigate customer complaints; if necessary, take appropriate corrective actions

• Identify what constitutes a customer complaint and ensure it is captured in the firm’s complaint process (high level).
• Investigate customer complaints and determine appropriate corrective action and documentation (high level).
• Respond to complaints within the appropriate timeframe and maintain evidence of communications (high level).
• Apply record retention and segregation requirements for complaint records (high level).
• Recognize regulatory reporting themes for customer complaints and reportable events and follow escalation paths (high level).
• Identify repeat complaint patterns and escalate for root-cause remediation and heightened supervision (high level).

F3 — Supervise General Options Trading (24%)

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Monitor the general operational process of options trades

• Explain electronic order routing and execution workflows for options at a high level and identify where supervision controls apply.
• Aggregate accounts for monitoring/reporting position limits, exercise limits, and large positions (high level).
• Supervise exercise notices and recognize contrary exercise advice concepts and escalation expectations (high level).
• Explain the impact of assignment on customer accounts and firm obligations (high level).
• Describe OCC assignment procedure concepts and distinguish firm allocation from OCC assignment selection (high level).
• Apply firm assignment allocation methods (e.g., FIFO or random) and ensure allocation is performed according to policy (high level).
• Ensure customers are notified of the firm’s assignment allocation method and retain required records (high level).
• Recognize delivery and payment/settlement concepts for exercised options and how failures can affect customer outcomes (high level).

Review firm and customer options trading for exceptions

• Recognize Regulation SHO concepts that can affect options-related short sale activity and locate/closeout/buy-in requirements (high level).
• Recognize large options position reporting themes and the operational controls needed to meet reporting requirements (high level).
• Apply order origin code and capacity concepts and ensure orders and trade records are marked correctly (high level).
• Recognize qualified contingent cross concept at a high level and identify when special handling may apply (high level).
• Identify prohibited activities and manipulative trading behaviors and recognize fact patterns requiring escalation (high level).
• Apply best execution supervision mindset for options orders (high level).
• Apply order marking and recordkeeping expectations to ensure audit trail integrity (high level).
• Analyze trade economics at a high level to identify suspicious or abusive trading patterns (high level).
• Maintain appropriate separation of proprietary, market making, and customer trading and apply supervisory controls (high level).
• Recognize insider trading and material nonpublic information risk themes and escalate under firm procedures (high level).

Oversee the correction of options trade errors

• Supervise cancel-and-rebill processes for correcting options trade errors (high level).
• Use error accounts under documented controls and ensure errors are tracked to resolution (high level).
• Ensure customers are notified when required and records reflect corrected trade details (high level).
• Document trade errors, approvals, and root-cause analysis consistent with WSPs (high level).
• Escalate significant errors and consider regulatory reporting implications when applicable (high level).

Authorize and monitor customer market access

• Authorize customer market access (DMA/sponsored access concepts) consistent with firm permissions and supervisory controls (high level).
• Set and monitor credit limits and capital limits for customer market access and trading activity (high level).
• Recognize regulatory market access control themes and the need for pre-trade risk management controls (high level).
• Monitor for limit breaches or unauthorized access and take immediate corrective action (high level).
• Document market access approvals and ongoing monitoring evidence (high level).
• Escalate market access control issues to compliance/risk and apply remediation steps (high level).

F4 — Supervise Options Communications (7.2%)

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Oversee options telemarketing practices

• Apply telemarketing procedures and supervision expectations for options solicitation (high level).
• Maintain and enforce do-not-call controls and documentation (high level).
• Apply time-of-day restriction concepts and other calling-window controls (high level).
• Ensure scripts and required disclosures are approved and compliant before use (high level).
• Document telemarketing supervision, exceptions, and corrective actions (high level).

Review options retail communications and determine appropriate approval

• Define retail communication and distinguish it from correspondence and institutional communications (FINRA Rule 2210 concept, high level).
• Identify common types of retail communications used in options marketing (ads, sales literature, websites, social media) at a high level.
• Apply required principal pre-approval concepts for retail communications and document approval before first use (high level).
• Review options trading program materials and options worksheets for clarity, assumptions, and non-misleading presentation (high level).
• Ensure appropriate disclosures are included in retail communications, including risks and required options program disclosures (high level).
• Recognize that retail communications must be fair and balanced and avoid promissory or exaggerated language (high level).
• Retain retail communications and approvals consistent with recordkeeping requirements (high level).

Review incoming and outgoing options correspondence including approval where required

• Review customer-directed correspondence (email/IM/letters) for compliance with communications standards (high level).
• Identify required disclosures that must be included in correspondence when discussing options strategies or risks (high level).
• Apply registered principal review requirements for correspondence where required and document supervision (high level).
• Ensure correspondence is retained in compliant archiving systems and retrievable for supervision/audit (high level).

Review institutional communications and determine appropriate approval

• Define institutional communication and identify institutional recipient categories (high level).
• Apply approval and supervision requirements for institutional communications under firm policy (high level).
• Ensure institutional communications remain fair and not misleading and include appropriate disclosures (high level).
• Retain institutional communications and supervision evidence consistent with recordkeeping rules (high level).

F5 — Implement Practices and Adhere to Regulatory Requirements (9.6%)

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Establish and oversee compliance with supervisory control functions

• Establish supervisory procedures covering the firm’s options business and escalation paths (high level).
• Implement and monitor discretionary account controls and periodic review requirements (high level).
• Apply supervision expectations for space-sharing arrangements and other supervisory structure risks (high level).
• Apply gifts and gratuities controls and recognize how incentives can create supervision risk (high level).
• Maintain written supervisory procedures consistent with SRO requirements and update procedures as rules or business practices change (high level).
• Implement and maintain written options programs and ensure personnel follow them (high level).

Maintain required books and records

• Maintain options-related books and records (account approvals, orders, trades, exercise/assignment, and margin documentation) consistent with SRO requirements (high level).
• Retain options communications and associated approvals in compliant systems (high level).
• Apply retention and storage expectations for options-related records and ensure records are retrievable for audits (high level).
• Recognize SIPC-related customer protection themes and why accurate records support customer protection (high level).
• Identify recordkeeping failures (missing approvals, incomplete archives) and implement corrective actions (high level).

F6 — Supervise Associated Persons and Personnel Management Activities (22.4%)

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Verify the qualifications of newly hired associated persons

• Conduct pre-hire investigations and background checks consistent with firm policy (high level).
• Verify previous registration status and review work history for accuracy and red flags (high level).
• Recognize statutory disqualification concepts and identify when a candidate may be ineligible (high level).
• Escalate statutory disqualification or disclosure issues to compliance and follow required procedures (high level).
• Document the hiring review process and retain required records (high level).

Review and maintain associated persons’ registrations and disclosures

• Apply continuing education requirements (Regulatory Element and Firm Element) and monitor completion (high level).
• Review and supervise outside business activities and secondary employment disclosures (high level).
• Supervise private securities transactions by registered persons and apply approval/reporting requirements (high level).
• Apply controls for employee and employee-related accounts and required approvals (high level).
• Recognize and prevent sharing in customer accounts, guarantees, and improper arrangements (high level).
• Apply supervision expectations for lending/borrowing arrangements with customers and escalation requirements (high level).
• Handle suspended associated persons by restricting activity and ensuring supervisory controls are applied (high level).
• Maintain accurate Form U4 and Form U5 updates and ensure timely filings (high level).
• Recognize disciplinary action and code-of-procedure themes and when heightened supervision is appropriate (high level).
• Recognize qualification and registration requirements for a Registered Options Principal and maintain registration status (high level).

Maintain marketplace and associated product and regulatory knowledge

• Maintain knowledge of common options order types and trading strategies used in the marketplace (high level).
• Recognize when trading rotation and fast market procedures may apply and their impact on execution/controls (high level).
• Recognize trading practices and roles of market participants (market makers, floor brokers, specialist/DPM concepts) at a high level.
• Recognize trading halt concepts and restrictions and how supervision obligations change during halts (high level).
• Apply FINRA trading halt rule concepts and escalation expectations (high level).

Supervise the conduct of associated persons

• Supervise associated persons’ use of options terminology, definitions, and strategy descriptions for accuracy (high level).
• Recognize sophisticated strategy risks and ensure strategies are used only for appropriate customers and approval levels (high level).
• Apply noncash compensation regulation concepts and detect improper incentives or sales contests (high level).
• Prevent improper use of customer assets and enforce controls designed to protect customer funds and securities (high level).
• Supervise transactions with other professionals and identify conduct that violates ethical standards (high level).
• Apply restrictions on guarantees, sharing in accounts, and assuming customer losses and escalate violations (high level).
• Apply borrowing/lending restrictions with customers and implement corrective actions when violations occur (high level).

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