Series 9 Cheatsheet — Options Accounts, Trading Activities & Supervision

Series 9 is an options supervision exam. The best answer is usually the one that follows WSPs, applies the correct options approval/limits/control, and creates a clean audit trail.

This cheat sheet is a study aid (not legal advice). Always follow your firm’s WSPs and current FINRA/SEC requirements.

Use this alongside the Syllabus and Practice. Series 9 is “options + supervision”: know the strategy economics, then pick the safest compliant supervisor action.

Exam map (where points come from)

Series 9 at a glance (FINRA)

• Items: 55 scored + 5 unscored (60 total)
• Time: 1 hour 30 minutes
• Passing score: 70

Job functions and weights

How Series 9 questions are written (exam mindset)

• Most questions are “branch manager supervision”: account approval, strategy suitability/best-interest thinking, limit/margin controls, or what to do after an exception occurs.
• Wrong answers often skip a required control: missing ODD/special statement, wrong approval level, unverified authority, or undocumented discretionary activity.
• When in doubt, pick the answer that restricts risk, escalates, and documents rather than “letting it through.”

“Best answer” checklist (Series 9 style)

• What is the customer’s approved options level? covered writing vs spreads vs uncovered writing, etc.
• Is the documentation complete? options agreement, ODD delivery, special statement where required, authority docs.
• Does the strategy fit the profile? objective, risk tolerance, experience, time horizon.
• What control is required? hold/decline, restrict, escalate, document, remediate.
• Will this survive an audit? approvals, timestamps, exception handling, retention.

Options account approval (F1 high yield)

What supervisors are really approving

Options account approval is a risk permissioning decision. You’re approving:

• the customer’s options approval level (what strategies are permitted)
• the documentation package (ODD delivery, agreements, special statements)
• the customer profile as the basis for the level (experience/objectives/risk)
• the margin profile (if margin is used; including strategy-specific implications)

Fast approval checklist

• customer identity verified (CIP) and onboarding documentation complete
• KYC profile supports options activity (experience, objectives, risk tolerance)
• ODD delivered and evidence retained
• special statement for uncovered writers delivered where required
• minimum equity requirements met for the approval level requested
• discretionary authority (if any) is documented and reviewed/approved by the designated ROP
• exceptions are documented and approved per WSPs

High-yield trap: approving a higher options level than the customer profile supports, or missing required delivery/acknowledgment evidence.

Options approval levels (firm-defined, exam-level patterns)

Firms can label levels differently, but the exam logic is consistent: higher-risk strategies require higher approvals, more equity, and clearer disclosures.

High-yield trap: if the stem says “customer is approved for covered writing only,” any answer involving spreads or uncovered writing is usually wrong.

Discretionary options accounts (frequent trap)

Discretion + options = heightened control:

• discretionary authority must be written, accepted, and supervised
• the designated supervisor (often an ROP) must review acceptance and ongoing activity (high level)
• “rep traded without prior customer approval” is usually wrong unless written discretion exists and is within scope

Strategy economics (Series 9 math you should know)

Option value vocabulary (fast)

• Intrinsic value: in-the-money amount (Call: S − K, Put: K − S, floored at 0).
• Time value: Premium − Intrinsic.
• Moneyness: ITM / ATM / OTM affects exercise probability and assignment risk.

Single-leg basics

Common “supervision” strategies

Notes:

• “Stock cost” is the price paid (basis) at entry.
• Spreads assume same expiration.
• Real-world results depend on early exercise, dividends, and assignment timing; Series 9 questions are usually expiration-based unless the stem signals otherwise.

Why supervisors care

• Breakeven and max loss determine whether a strategy is consistent with the customer profile.
• “Unlimited loss” strategies are usually where approvals, equity, and disclosures matter most.

Suitability and best-interest thinking (F1 + F2)

Series 9 is not a pure math exam; it’s a “should the firm allow this?” exam.

Fast suitability screen for options strategies

• Objective fit: income vs hedging vs speculation (and whether the customer is truly seeking that objective).
• Risk tolerance: is max loss and worst-case scenario acceptable and understood?
• Experience: does the customer have options experience consistent with the complexity?
• Time horizon and liquidity: can they withstand adverse moves without forced liquidation?
• Concentration: is the options position too large relative to net worth/liquid assets?
• Costs: commissions and strategy costs can overwhelm expected benefit (high level).

High-yield trap: “customer wants income” doesn’t automatically justify uncovered writing.

Margin and limits supervision (F1 + F2)

Margin supervision themes (exam level)

• strategy-specific margin implications (uncovered writing vs spreads vs covered positions)
• initial vs maintenance requirement concepts and what happens when equity falls
• portfolio margin requires specialized approvals and monitoring
• pattern day trader concepts can trigger special equity and supervision rules
• position limits, exercise limits, and large position reporting are monitored and exceptions escalated

Defined-risk spread margin intuition (high yield)

For most defined-risk vertical spreads, supervisors should know the “shape” of risk:

• Debit spread: max loss is the debit paid (paid-in-full logic).
• Credit spread: margin is driven by the spread width, offset by the credit received.

Example (concept):

• sell 50 put, buy 45 put for a 2 credit → width is 5 → max loss is 5 − 2 = 3 per share (× 100 per contract).

Limits and large position monitoring (exam level)

The exam expects you to recognize that firms monitor:

• position limits and exercise limits
• large position reporting triggers
• aggregation across related accounts for monitoring/reporting (high level)

Supervisor move: investigate exceptions, restrict activity, and document corrective action.

Exercise and assignment operations (F2 high yield)

Know the supervisor-relevant concepts:

• assignment happens to writers; customers can be assigned unexpectedly
• exercise notices can include contrary exercise advice (process-focused)
• OCC assignment and firm allocation methods (e.g., FIFO vs random) exist; customers must be notified of the method used
• corporate actions can adjust option contracts; supervise correct handling and customer impact
• settlement/delivery and payment mechanics follow from the exercise/assignment outcome

Early exercise and dividend risk (common exam logic)

Series 9 questions often test the idea (high level) that early exercise risk is not random:

• calls that are deep ITM with little time value remaining can be exercised
• dividend timing can change the economics of exercising vs holding

Supervisor move: ensure customers receive appropriate risk disclosures and that the firm’s procedures handle assignment/exercise correctly.

Complaints and errors (F2)

Two recurring exam moves:

• Complaint: log, acknowledge, escalate, investigate, retain.
• Trade error: correct transparently (cancel/rebill or error account), don’t shift losses to a customer, and follow the obvious error process where applicable.

Prohibited activities and red flags (F2)

When you see these in a stem, think: “stop, escalate, document.”

• guaranteeing profits or against loss
• sharing in accounts or assuming customer losses
• unauthorized or unapproved discretion
• borrowing from or lending to customers (conflict)
• “trades with no economic purpose” that look like manipulative activity
• MNPI or information barrier violations

Options communications (F3)

What Series 9 is testing:

• communications must be fair and balanced; avoid guarantees, misleading risk statements, or cherry-picked performance
• options programs/worksheets have specific content and disclosure expectations (high level)
• retail vs correspondence vs institutional categories matter for review/approval and record retention

High-yield trap: using disclaimers as a substitute for fixing a misleading main message.

Communication category quick map (exam level)

• Retail communication: broad distribution; principal approval and records matter most.
• Correspondence: customer-specific; still must meet content standards and be supervised/retained.
• Institutional communication: institutional-only; still must be fair, accurate, and appropriately disclosed.

Glossary (Series 9 level)

• Assignment: OCC process allocating exercise to short positions (writers).
• Breakeven: underlying price where profit/loss is zero at expiration.
• CIP / AML: onboarding identity verification and anti-money laundering controls (high level).
• Close: buy/sell transaction used to offset (close) an existing option position.
• Covered call: short call backed by long underlying.
• Debit spread / credit spread: spread opened for a net debit (premium paid) or net credit (premium received).
• Delta / theta / vega: sensitivity measures for price, time decay, and volatility (high level; useful for risk intuition).
• Exercise: using the contract’s right (call buys shares; put sells shares).
• Intrinsic / time value: in-the-money value vs premium beyond intrinsic.
• ODD: Options Disclosure Document; must be delivered and evidenced.
• OCC: Options Clearing Corporation; clears and assigns standardized listed options.
• ROP: Registered Options Principal; designated supervisor for options account approvals (high level).
• Spread width: difference between strike prices in a vertical spread; drives maximum risk in many defined-risk spreads.
• Uncovered (naked) option: short option without an offsetting position; higher-risk approval level.
• Position/exercise limits: limits intended to reduce market impact/manipulation risk (high level).