Stock Option+Margin Flashcards
What is a thinly traded issue?
A stock that may be difficult to sell short because the shares may not be available to borrow
In determining if additional margin is required in a customer’s account, the broker-dealer will mark the account to the market:
Daily
What is Nasdaq Level II System?
Firm quotes of all the market makers in a stock
Prior to establishing a portfolio margin program for its clients, a broker-dealer is required to obtain approval from who?
FINRA
What is the hypothecation agreement?
When the customer agrees to pledge the securities to the broker-dealer as collateral for the loan.
Who must a trader at your firm who executes an order for a corporate bond report this to?
Trade Reporting and Compliance Engine (TRACE)
An investor owns stock that has increased in value. What is the most suitable recommendation for an RR to make if the investor wants to protect her profit?
A sell stop order that’s placed below the current market price or a long put position
Can options be purchased on margin?
No, 100% deposited
What is an immediate-or-cancel order?
An order that must be executed immediately but does not need to be executed in its entirety AT THE PRICE. Part of the order may be executed.
What does it mean when an order is given with a price?
Its a limit order and can be placed partially
What is a stock that is not listed on an exchange or quoted in the OTC market?
Grey market
How do you find the total dollar value of marginable securities in an account with marginable securities, non marginable securities, and cash?
Marginable securities + Cash x 2
When is a margin disclosure document provided to customers?
At the time the account is opened and annually thereafter
What price does a CUSTOMER pay when purchasing a stock?
The ASK/OFFER price
What price will a CUSTOMER get when selling a stock?
bid price.
What can Buy-stop orders or sell-stop orders provide?
Protection for a short
Protection for a long
Protection for Fluctuations in the market price of a stock
What is the typical maintenance of a leveraged long ETF?
25%
What is the typical margin requirement of a leveraged ETF on a short position?
30%
What lists assists a broker-dealer in making a reasonable determination that a security is available to be borrowed from another broker-dealer in order to effect a short sale transaction?
An Easy to Borrow list
What is acting in principal?
Buying for your own account and charging a markdown if youre buying and markup if youre selling.
What is the minimum equity requirement for a pattern day trader?
$25,000, which must be deposited before the client may continue day trading
What is the initial equity requirement in a margin account?
100% of the value or $2000, whichever is less.
What is Regulation SHO (Shoshone indians)
Regulation SHO requires a broker-dealer to make a notation on every sell order ticket to indicate whether the transaction is a long sale or a short sale.
When does a client act as an agent?
When a broker-dealer buys a security from a market maker (dealer) on behalf of its customer. Charges commission.
When can A customer who purchases shares of an exchange-traded fund (ETF) may be extended credit?
Immediately
What is an unsolicited order?
customer is entering the order using his own judgement and not relying on the RR’s recommendations
