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FINRA · 2026 · Free

Series 4 Practice Exam

Series 4 practice exam for Registered Options Principals. 125 questions, 3 hours 15 minutes, 70% to pass.

125Scored Questions
3 hrs 15 minTime Limit
70%Passing Score
Series 7Co-requisite
FINRAAdministered By

Series 4 -- Registered Options Principal

125 scored questions (135 total), 3 hours 15 min, 70% to pass. Qualifies you to supervise options trading and sales at a broker-dealer. Requires Series 7 as a co-requisite.

Practice by Series 4 Domain

Target a specific area, or launch the full exam below

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Options Products and Strategies

Covered calls, spreads, straddles, butterflies, Greeks (delta gamma), put-call parity, and strategy mechanics. ~24% of exam.

20 questions
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Customer Accounts and Suitability

Options approval levels, ODD delivery, suitability analysis, account types, exercise and assignment, position limits. ~20% of exam.

17 questions
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Supervision and Compliance

FINRA Rule 3110, WSPs, ROP responsibilities, churning detection, discretionary account review, and supervisory systems. ~20% of exam.

17 questions
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Communications and Documentation

FINRA Rule 2220, options advertising review, retail vs. institutional communications, ODD requirements, and FINRA filing obligations.

20 questions
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Margin and Risk Management

Covered vs. uncovered margin requirements, portfolio margin, OCC margin rules, and risk controls.

13 questions

About the Series 4 Exam

The Series 4 Registered Options Principal exam qualifies you to supervise options sales activities at a FINRA member broker-dealer. It is required for any principal responsible for reviewing and approving options account applications, approving options advertising and sales literature, and supervising options trading and sales. The Series 7 is required as a co-requisite — you must pass or be concurrently enrolled in the Series 7.

The exam contains 125 scored questions (135 total with 10 unscored pretest questions) with a 3-hour 15-minute time limit and a 70% passing score. The Series 4 is one of the more specialized FINRA principal exams, focusing exclusively on options supervision rather than general securities supervision.

125Scored Questions
3 hrs 15 minTime Limit
70%Passing Score
Series 7Co-requisite
FINRAAdministered By

Series 4 Exam Topic Breakdown

TopicWeightKey Areas
Options Markets and Instruments~35%Listed options, OTC options, index options, LEAPS, options contract specs
Options Strategies and Risk~30%Calls, puts, spreads, straddles, combinations, covered writing, collars
Supervision of Options Activities~25%Account approval levels, supervisory procedures, suitability, documentation
Regulations and Compliance~10%OCC rules, CBOE rules, FINRA rules on options, advertising standards

Sample Series 4 Exam Questions

1. A customer wants to open an options account to trade naked calls. As the Registered Options Principal, you should approve this account for which level?

  • A. Level 1 — covered writing only
  • B. Level 2 — buying options and covered writing
  • C. Level 3 — spreads in addition to Level 2
  • D. Level 4 — uncovered (naked) writing
Correct: D — Level 4. Most broker-dealers use a tiered options account approval system. Naked (uncovered) call writing carries the theoretically unlimited risk and requires the highest approval level (typically Level 4 or equivalent). The ROP must ensure the customer meets the firm's financial suitability standards, has sufficient net worth and income, and understands the risks before approving uncovered writing. This is the most supervisory-intensive options activity.

2. A registered representative purchases advertising that promotes a specific options strategy as 'low risk' without disclosing the risks of loss. As the Registered Options Principal, you should:

  • A. Approve it if the strategy is generally considered conservative
  • B. Require revision to include a balanced risk disclosure before approving
  • C. Forward it to FINRA for review before approving
  • D. Approve it because the representative is responsible for accuracy
Correct: B. The ROP is responsible for reviewing and approving all options advertising before use. FINRA Rule 2220 and OCC rules require that options advertising and sales literature present a balanced view of risks and benefits. 'Low risk' without disclosing downside scenarios violates the fair and balanced standards. The ROP must require revision before the material can be used — approving non-compliant advertising exposes both the firm and the principal to regulatory liability.

3. A customer holds 100 shares of XYZ at $50 and writes 1 XYZ 55 call at $2. The maximum gain on this covered call position is:

  • A. Unlimited
  • B. $200
  • C. $700
  • D. $500
Correct: C — $700. On a covered call: Maximum gain = (Strike price − Stock purchase price + Premium received) × 100 shares = ($55 − $50 + $2) × 100 = $700. This occurs when the stock is called away at $55. The maximum loss = (Stock purchase price − Premium received) × 100 = ($50 − $2) × 100 = $4,800 (stock goes to zero). Covered call options math is foundational for the Series 4 — know maximum gain, maximum loss, and breakeven for covered calls and the major spread strategies.

Study Tips for the Series 4 Exam

The Series 4 requires deep fluency in options strategies — not just definitions but the ability to calculate maximum gain, maximum loss, and breakeven for any position: long/short calls and puts, covered calls, protective puts, bull/bear spreads, straddles, strangles, and collars. Know which strategies benefit from volatility increases vs. decreases (long straddles profit from volatility; short straddles profit from stability).

Options account supervision is the exam's unique focus. Know the typical tiered approval levels, the suitability requirements for each level, what documentation is required when opening an options account (the Options Disclosure Document must be provided), and the ROP's responsibilities for reviewing advertising. OCC rules, CBOE rules, and FINRA Rule 2220 (Communications with the Public regarding options) are the key regulatory frameworks.

Frequently Asked Questions — Series 4 Exam

What does the Series 4 license allow you to do?

The Series 4 qualifies you to act as a Registered Options Principal (ROP) at a FINRA member firm — supervising options sales activities, approving options accounts, reviewing and approving options advertising and sales literature, and overseeing options trading compliance.

What exams are required alongside the Series 4?

The Series 4 requires the Series 7 as a co-requisite (you must hold or be concurrently testing for the Series 7). The SIE is also required as a prerequisite. To become a General Securities Principal, you would need the Series 24 in addition to the Series 4 for options supervision authority.

What is a Registered Options Principal (ROP)?

A Registered Options Principal is a principal at a FINRA member broker-dealer who is specifically qualified to supervise options activities. ROPs must review and approve options account applications, approve all options advertising before it is used, and maintain supervisory procedures for options trading. Every firm that conducts options business must designate at least one ROP.

What are the options account approval levels?

While individual firms set their own level structures, typical tiers are: Level 1 (covered call writing), Level 2 (buying calls and puts, covered writing), Level 3 (spreads), and Level 4 (uncovered/naked writing). Each level requires increased suitability documentation. The ROP must ensure customers understand the risks appropriate to their approved level.

What is the Options Disclosure Document (ODD)?

The ODD ('Characteristics and Risks of Standardized Options') is published by the OCC and must be provided to customers before or at the time of opening an options account. It explains the characteristics, risks, and mechanics of listed options. Providing the ODD and having the customer acknowledge receipt is a regulatory requirement.

How does the Series 4 differ from the Series 9?

The Series 9 (General Securities Sales Supervisor — Options) covers similar options supervision content from a branch-level supervisory perspective. The Series 4 is more options-focused and is typically held by dedicated options principals. The Series 9 is taken alongside the Series 10 to obtain the General Securities Sales Supervisor (Series 9/10) qualification.

What are the key regulations governing options at FINRA member firms?

Key rules include: FINRA Rule 2360 (Options), FINRA Rule 2220 (Options Communications with the Public), OCC rules and bylaws, and CBOE rules. The ROP must be familiar with margin requirements for options positions, suitability standards, and supervisory procedures required under FINRA Rule 3110.

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