1.1 Options Account Opening Requirements

Who Approves the Account

The Series 9/10 (General Securities Sales Supervisor) exam is a 90-minute, 55-scored-question test (plus 5 unscored pretest items) requiring a 70% passing score, and Chapter 1 leans heavily on FINRA Rule 2360 (Options). As a supervisor you act as a Registered Options Principal (ROP) or Senior Registered Options Principal (SROP). Every new options account must be approved in writing by a ROP or SROP before the first options order is accepted. The approving principal's signature and date are the proof that supervision occurred.

Exam trap: A general securities principal who is not options-qualified cannot approve an options account. Only a ROP/SROP can.

The Options Disclosure Document (ODD)

The Options Disclosure Document (ODD), formally titled Characteristics and Risks of Standardized Options and published by The Options Clearing Corporation (OCC), explains how options work and their risks. It is the single most testable opening-document timing rule.

Exam trap: Delivery "at the first trade" or "within 15 days" is wrong. The 15-day clock belongs to the agreement, not the ODD.

The Options Agreement and the 15-Day Rule

After approval, the customer must sign and return the options agreement within 15 calendar days. The agreement is the customer's promise to abide by OCC rules and position/exercise limits.

• Day 0: account approved by ROP/SROP and first trade may occur.
• Within 15 calendar days: signed agreement must be returned.
• After day 15 with no agreement: no new opening transactions are permitted; the customer may only close existing positions.

The account is not closed and no penalty fee applies — the supervisor simply restricts the account to closing transactions until the form arrives.

Customer Information the Principal Must Verify

Before approval, the ROP gathers and verifies the customer's profile. Discrepancies must be resolved and documented.

Worked Approval Scenario

A representative submits an account for a 68-year-old retiree, annual income $40,000, net worth $300,000, objective "income," no prior options experience, requesting the highest level (uncovered call writing). The ROP should decline uncovered writing — naked call writing carries theoretically unlimited risk unsuitable for a low-income retiree with no experience — and instead approve a conservative level (covered calls), documenting the reasoning. Approving uncovered writing here is the classic exam wrong answer.

Tiered Trading Levels

Levels are firm-specific labels, but the principle is universal: the assigned level must align with the verified profile, and the principal owns that judgment. The risk ranking matters — an uncovered put has a large but finite maximum loss (strike minus premium), while an uncovered call has theoretically unlimited loss, which is why naked call writing sits at the highest level.

The SROP / ROP Distinction

Large firms designate a Senior Registered Options Principal (SROP) with overall compliance responsibility for the options program and a Compliance Registered Options Principal (CROP) focused on advertising and customer-complaint handling. Day-to-day account approvals can be delegated to any qualified ROP, but the SROP/CROP framework is what the exam expects you to name when asked who owns firm-wide options supervision. The Series 9 qualifies you to act in the sales-supervisor capacity; pairing it with the Series 10 General Securities Sales Supervisor module completes the principal-level authority over a branch's options business.

Documenting the Background and Financial Verification

FINRA Rule 2360 requires the firm to exercise due diligence to learn the essential facts about the customer before approval. The principal's file must show:

• The date the account was approved and by whom (signed/initialed).
• The specific trading level granted and the basis for it.
• Verification that the customer's stated income, net worth, and experience are internally consistent — a customer claiming $2 million net worth on $25,000 income is a discrepancy to resolve, not ignore.
• A record that the current ODD was delivered at or before approval.

Exam trap: The background/financial information must be verified within 15 calendar days of approval as well — the same 15-day window the agreement uses. If the customer never returns the verifying information, the firm is restricted to closing transactions, mirroring the agreement rule.

Common Opening-Stage Violations

The through-line for every opening question is sequence: gather and verify the profile, deliver the ODD, approve at the right level in writing, then accept orders — and chase the signed agreement within 15 days.