Part 1 Lesson 2.1 Sales Activity and Suitability Flashcards
A series 9/10 supervisor
A general securities sales supervisor is responsible for the following:
• Approving new accounts
• Reviewing correspondence
• Reviewing order tickets and trade blotters
A series 9/10 supervisor CANNOT oversee the following
Investment banking
Market making
Nor can this person approve communications with the public (advertising or sales literature)
Suitability for recommendations
The basis of the suitability information must consider:
investment objectives
financial situations and needs
any other information
Regulation BI best interest
Any member must exercise reasonable diligence, care, and skill in making a recommendation by:
acknowledging the potential risks,
acting in the best interest of a customer
ensuring recommendations are in the best interest
A written disclosure before at the time of the recommendation
Common objectives of call buyers
Call buyers are bullish on the underlying stock:
Speculative profit
Deferring a decision
Diversifying holdings
Common objectives of call buyers
Investment Strategies
• Common objectives of call buyers
- Call buyers are bullish on the underlying stock:
• Speculative profit
• Deferring a decision
• Diversifying holdings
Common objectives of call writers
Common objectives of call writers
Call writers are generally neutral on the underlying stock:
Increasing yield
Lock in a sale price
Common objectives of put buyers
Common objectives of put buyers
Put buyers are generally bearish:
Speculating on a decline
Defer a decision
Protect a position
Common objectives of put writers
Put writers are neutral to bullish.
Put writers assume much greater risks than put buyers.
Buying stock below its current price
This is a good way to buy the stock at a cost lowered by the amount of the time premium received.
