Options

Options are one of the most exam-intensive parts of the Series 7 because they combine product mechanics, customer approval rules, valuation, and strategy payoff logic. This chapter moves from contract basics into trading conventions, premium drivers, basic positions, advanced strategies, and regulation.

That sequence is deliberate. Candidates usually struggle when they memorize isolated strategy names without first understanding rights and obligations, contract terms, and how price, time, and volatility affect option value.

In this section

• Options Fundamentals
  Understand calls, puts, contract terms, buyers and writers, and basic option mechanics.
• Options Markets and Trading
  Review listed-option markets, OCC clearing, account approval, and trading conventions.
• Options Pricing and Premiums
  Understand intrinsic value, time value, volatility, and the main drivers of option premiums.
• Basic Options Strategies
  Review long and short calls and puts, covered calls, protective puts, and breakeven logic.
• Advanced Options Strategies
  Review spreads, straddles, combinations, and other multi-leg strategies tested on the Series 7.
• Options Regulation and Compliance
  Understand options disclosure, approval, position limits, and core FINRA and SEC rules.