FINRA Series 9

Resources

Forward stock splits lower share price without losing value, shown through Apple's 2014 seven-for-one split and the stock split factor calculation.

A long call quote is broken into its parts, showing how strike price, expiration and premium set the right to buy 100 shares. The call up put down rule splits that premium into intrinsic value and time value.

A long put quote shows the right to sell stock at a strike price, then its premium is split into intrinsic and time value using call up put down.

A four-step system finds max gain, max loss, and breakeven for a call spread, using strike price difference and net premium debit. Naming the spread by its dominant leg shows why a lower strike call makes it a bullish debit spread.

A bull put spread's maximum gain, loss, and break even come from netting premiums and strike prices, with the long put as downside protection.

A vacation-cost example shows how exchange rates affect foreign investments: a strengthening dollar cheapens purchases but shrinks sale proceeds.

Selling a call obligates the seller to sell 100 shares at the strike price, while the premium splits into intrinsic and time value via the call up rule.

Agency trades connect buyers and sellers for a commission, while principal (dealer) trades fill orders from the firm's own inventory with a markup or markdown.

A short put quote is decoded piece by piece, showing why selling it obligates the seller to buy stock at the strike price. The 'call up, put down' rule splits the premium into intrinsic and time value.

Hedging pairs long stock with a long put, or short stock with a long call, using the option as insurance at the cost of its premium.

Covered calls and covered puts sell an option against a stock position for premium income, yet the stock position can still lose significant money.

A 70 call worth $5 when the market hits 75 shows the call up rule, and premium splits into intrinsic plus time value; good for longs, bad for short sellers.

A long straddle pairs a long call and put at the same strike and expiration. It gains from big price moves but risks both premiums if price lands at the strike.

A short call and a short put at the same strike and expiration: it profits if the price stays flat, and the short call leaves the upside risk unlimited.

Spreads get classified as horizontal, vertical, or diagonal based on differing strikes or expirations, then named for their dominant leg using premium size or strike-price rules to label them long/short, debit/credit, and bull/bear.

A short stock and long call hedge is solved with a T-chart for max gain, max loss, and break-even, showing the call caps losses above the strike.

Works a margin account example where a stock rises from 80 to 90, finding equity, equity percentage, and the 25% minimum maintenance level for long accounts.

Equity in a margin account combines long market value minus debit plus credit minus short market value, with a worked example plugging in numbers to find the total.

A short stock position paired with a short put shows how breakeven, max gain, and max loss play out using a T-chart, revealing that max loss stays unlimited despite the strategy's name.

Tax treatment of options covers expiration and closing trades as capital gains or losses, plus how exercising calls and puts sets stock cost basis or sales proceeds by adding or subtracting the premium.

Puts gain intrinsic value as market price falls below strike price (put down), distinct from premium; an example computes the resulting gain or loss.

Reverse stock splits raise a low share price by shrinking share count, shown through a split-factor calculation turning 1000 $4 shares into 100 $40 shares. Because they alter par value, they need shareholder approval.