189+ Free Series 4 Practice Questions

Pass your Registered Options Principal Qualification Examination exam on the first try — instant access, no signup required.

✓ No registration✓ No credit card✓ No hidden fees✓ Start practicing immediately

60-70% Pass Rate

189+ Questions

100% Free

1 / 10

Question 1

Score: 0/0

A customer owns 100 shares of XYZ stock at $50 per share and writes a covered call with a strike price of $55. What is the maximum profit potential on this position?

Unlimited

$500 (the premium received)

$500 plus the premium received

$1,000 plus the premium received

to track

2026 Statistics

Key Facts: Series 4 Exam

60-70%

First-Time Pass Rate

Industry estimate

72%

Passing Score

90/125 questions

60-80 hrs

Study Time

Recommended

24%

Options Trading

Largest section

$200

Exam Fee

FINRA

3h 15m

Exam Duration

FINRA

The Series 4 exam has an estimated 60-70% first-time pass rate. It requires 72% (90/125 questions) to pass in 3 hours 15 minutes. The exam covers six major areas: Supervise Opening Accounts (17%), Account Activities (20%), General Options Trading (24%), Communications (7%), Regulatory Requirements (10%), and Personnel Management (22%). Prerequisites: SIE + Series 7 + firm sponsorship. Plan for 60-80 hours of study.

Sample Series 4 Practice Questions

Try these sample questions to test your Series 4 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 189+ question experience with AI tutoring.

1A customer owns 100 shares of XYZ stock at $50 per share and writes a covered call with a strike price of $55. What is the maximum profit potential on this position?

A.Unlimited

B.$500 (the premium received)

C.$500 plus the premium received

D.$1,000 plus the premium received

Explanation: In a covered call, the maximum profit is the difference between the strike price and the stock purchase price, plus the premium received. If XYZ rises to $55 or above, the stock will be called away at $55. The profit is ($55 - $50) × 100 = $500 from the stock appreciation, plus whatever premium was received for selling the call. The maximum profit is capped because the upside potential is sacrificed above the strike price.

2A registered options principal is reviewing a customer account that shows a long position of 100 shares of ABC at $40 and a long put with a $40 strike. This strategy is best described as:

A.A covered call

B.A protective put (married put)

C.A bull spread

D.A naked put

Explanation: A protective put (also called a married put when established simultaneously) involves owning the underlying stock and purchasing a put option on that stock. The put acts as insurance, limiting downside risk to the strike price minus the premium paid. In this case, if ABC falls below $40, the customer can exercise the put to sell at $40, protecting against further losses.

3A customer establishes a bull call spread by buying a $50 call for $3 and selling a $55 call for $1. What is the maximum loss and maximum gain for this position?

A.Max loss $200, max gain $300

B.Max loss $300, max gain $200

C.Max loss $200, max gain $500

D.Max loss $500, max gain $200

Explanation: In a bull call spread, the maximum loss is the net debit paid ($3 - $1 = $2 per share, or $200 for the contract). The maximum gain is the difference between strike prices minus the net debit: ($55 - $50) - $2 = $3 per share, or $300. The spread limits both risk and reward compared to simply buying the call.

4A registered options principal reviewing a customer account discovers a short strangle position: short $45 put and short $55 call, with the stock at $50. What is the maximum risk?

A.Limited to the premiums received

B.$500 minus premiums received

C.Unlimited on the upside, substantial on the downside

D.$1,000 minus premiums received

Explanation: A short strangle involves selling out-of-the-money calls and puts. The maximum gain is limited to the premiums received. However, the risk is unlimited on the upside (if the stock rises significantly, the short call losses are unlimited) and substantial on the downside (limited only by the stock falling to zero, minus the put strike). This is a high-risk strategy suitable only for experienced investors with appropriate account approval.

5A customer creates a collar by buying stock at $50, buying a $45 put for $1, and selling a $55 call for $1. What is the net cost of the protective strategy?

A.$50 per share

B.$51 per share

C.$49 per share

D.$46 per share

Explanation: A collar involves owning stock, buying a protective put, and selling a covered call to finance the put purchase. In this case, the $1 cost of the put is exactly offset by the $1 premium received from selling the call. Therefore, the net cost remains $50 per share (the stock purchase price). The collar provides downside protection below $45 but caps upside at $55.

6A registered options principal is reviewing a bear put spread: long $60 put at $4, short $55 put at $2. What is the breakeven stock price at expiration?

A.$58

B.$57

C.$53

D.$52

Explanation: In a bear put spread, the net debit is $4 - $2 = $2. The breakeven is calculated as the higher strike price minus the net debit: $60 - $2 = $58. At $58, the long $60 put is worth $2 (intrinsic value), which exactly covers the net cost of the spread. Below $58, the position becomes profitable, with maximum profit achieved at or below $55.

7A customer establishes an iron condor by selling a $45 put, buying a $40 put, selling a $55 call, and buying a $60 call. What is the primary objective of this strategy?

A.To profit from a large move in either direction

B.To profit from time decay with limited risk when the stock stays range-bound

C.To hedge an existing long stock position

D.To create a synthetic long position

Explanation: An iron condor is a non-directional strategy combining a bull put spread and a bear call spread. It is designed to profit from time decay (theta) when the underlying stock remains within a specific trading range ($45-$55 in this example). The maximum profit is the net credit received, achieved when the stock stays between the short strikes at expiration. Risk is limited to the width of the spreads minus the net credit.

8A customer sells a naked call option. What is the maximum potential loss?

A.The strike price minus the premium

B.Unlimited

C.The premium received

D.The strike price times 100

Explanation: A naked (uncovered) call option has unlimited risk because there is no theoretical limit to how high a stock price can rise. If the stock price increases significantly above the strike price, the seller must deliver shares at the strike price, incurring losses that increase as the stock rises. This strategy requires the highest level of options approval and significant margin requirements.

9A registered options principal reviews a cash-secured put position where a customer sold a $50 put and maintains $5,000 in cash in the account. If assigned, what is the customer's effective purchase price for the stock?

A.$50 per share

B.$50 minus the premium received per share

C.$50 plus the premium received per share

D.The current market price at assignment

Explanation: When selling a cash-secured put, the investor receives a premium upfront. If assigned (stock price below strike at expiration), the investor must purchase the stock at the strike price. The effective cost basis is reduced by the premium received. For example, if the put was sold for $2, the effective purchase price is $50 - $2 = $48 per share, not counting commissions.

10A customer creates a ratio write by owning 200 shares of stock and selling 3 call options. What best describes this position?

A.Fully covered with no risk

B.Partially covered with upside risk on the third call

C.A neutral strategy with limited profit potential

D.A synthetic long put position

Explanation: A ratio write involves selling more call options than the underlying shares can cover. With 200 shares and 3 short calls, 2 calls are covered but 1 is naked (uncovered). The naked call has unlimited upside risk. While the strategy generates more premium income than a standard covered call, it exposes the investor to potentially unlimited losses if the stock rises significantly above the strike price on the uncovered portion.

About the Series 4 Exam

The Series 4 qualifies principals to supervise options sales and trading activities at broker-dealers. It covers options account supervision, trading strategies, communications, compliance procedures, and personnel management. This exam is required for anyone who supervises options-related activities.

Questions

125 scored questions

Time Limit

3 hours 15 minutes

Passing Score

72%

Exam Fee

$200 (FINRA)

Series 4 Exam Content Outline

17%

Supervise Opening of New Options Accounts

Account documentation, customer profiles, KYC, AML, suitability, and approval levels

20%

Supervise Options Account Activities

Account reviews, margin requirements, exercise/assignment, position limits, and account maintenance

24%

Supervise General Options Trading

Options strategies, spreads, combinations, index options, OTC options, and order handling

Supervise Options Communications

Advertising, correspondence, sales literature, educational materials, and options disclosure

10%

Implement Practices and Regulatory Requirements

Compliance procedures, recordkeeping, reporting, Cboe and FINRA rules

22%

Supervise Associated Persons and Personnel Management

Registration, training, conduct, disciplinary actions, and CE requirements

How to Pass the Series 4 Exam

What You Need to Know

Passing score: 72%
Exam length: 125 questions
Time limit: 3 hours 15 minutes
Exam fee: $200

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

Series 4 Study Tips from Top Performers

1Master complex options strategies including spreads, straddles, strangles, and combinations at a supervisory level

2Understand margin requirements for various options positions - Reg T and FINRA maintenance requirements

3Study position limits and exercise limits per Cboe and FINRA rules

4Know options account approval levels and suitability requirements for each level

5Learn supervisory responsibilities for options communications and advertising under Rule 2220

6Understand the OCC exercise and assignment process thoroughly

7Study personnel management - registration, training, continuing education, and disciplinary procedures

8Practice scenario-based questions on supervising options trading activities

Frequently Asked Questions

What is the Series 4 exam?

The Series 4 is FINRA's Registered Options Principal Qualification Examination. It qualifies individuals to supervise options sales and trading activities at broker-dealers. The exam covers options account supervision, complex trading strategies, communications compliance, regulatory requirements, and personnel management. It is required for anyone who will supervise options-related activities.

What is the Series 4 pass rate?

The Series 4 exam has an estimated pass rate of 60-70% for first-time test-takers. The exam has 125 multiple-choice questions with a 72% passing score (90 correct answers), taken over 3 hours 15 minutes. The complexity of options strategies and supervisory scenarios contributes to the difficulty.

What are the prerequisites for the Series 4?

You must pass the SIE exam and Series 7 (General Securities Representative) before taking the Series 4. Firm sponsorship is also required. The Series 4 builds on the options knowledge from the Series 7 at a supervisory level, testing your ability to oversee options operations.

How long should I study for Series 4?

Plan for 60-80 hours of study over 6-10 weeks. Focus on complex options strategies including spreads and combinations (24% of exam), account supervision and margin requirements (20%), and personnel management (22%). Complete at least 200 practice questions and score 80%+ consistently before scheduling your exam.

What are the main topics on the Series 4?

The main topics are: Supervise General Options Trading (24%), Supervise Associated Persons (22%), Supervise Account Activities (20%), Supervise Opening Accounts (17%), Regulatory Requirements (10%), and Supervise Communications (7%). The exam focuses heavily on supervisory scenarios involving options strategies, margin, and compliance.

How is the Series 4 different from the Series 7?

The Series 7 tests your ability to sell securities including options, while the Series 4 tests your ability to supervise options-related activities. The Series 4 covers supervisory responsibilities like account approval, margin oversight, compliance procedures, and personnel management that are not covered on the Series 7. You must pass the Series 7 before taking the Series 4.