Options Agreement

On Monday, March 2, 2026, a registered options principal at Thurgarton Vale Securities approves the account of Rosalind Ebbutt for options trading, and the firm delivers the current options disclosure document to her that day. Rosalind places her first covered call order on Wednesday, March 4, and the firm executes it. By Friday, March 27, she still has not returned the signed options agreement. What is the firm's position?

1. A.The March 4 trade was a violation, because no options order may be accepted until the signed agreement is on file.Trading may begin once the account is approved and the disclosure document delivered. The agreement has its own separate fifteen-day deadline.
2. B.Nothing need change; the agreement is a record-keeping formality with no effect on trading.It is not merely a formality. Once the fifteen-day period lapses the account must be restricted.
3. C.The March 4 trade was proper, but the account must now be restricted to closing transactions until the signed agreement is received.Correct. Approval plus delivery of the disclosure document permits trading; the lapse of the fifteen-day window limits the account to closing transactions.
4. D.The account must be closed and all positions liquidated immediately, because the fifteen-day deadline has passed.Forced liquidation is not the consequence. The customer retains her positions and may close them; she simply may not open new ones.

Why: Two distinct obligations run on different clocks. The options disclosure document must be delivered at or before account approval, which the firm did. The signed OPTIONS AGREEMENT, in which the customer represents that she understands and will abide by the rules and position limits, must be returned within FIFTEEN DAYS after the account is approved. Trading may begin once the account is approved and the disclosure document has been delivered, so the March 4 covered call was properly executed. But the fifteen-day window expired in mid-March. With the agreement outstanding, the account must be restricted to closing transactions only: the customer may liquidate existing positions but may not open new ones until the signed agreement is received.

A registered options principal approves a customer's new options account, and her first trade executes that same day. Under FINRA rules, the customer's signed options agreement must be returned to the firm:

1. A.Within 10 business days after the first trade settlesThe clock runs from account approval, not from settlement, and the period is 15 days.
2. B.Within 15 days after the account is approvedCorrect. The signed agreement is due within 15 days of approval, which is why trading may begin first.
3. C.Within 30 days after the account is approvedThirty days is too long. The options agreement window is 15 days.
4. D.Before the customer's first options trade may be executedThat requirement applies to the Options Disclosure Document and to principal approval, not to the signed agreement.

Why: The sequence is fixed. The Options Disclosure Document must reach the customer at or before account approval, the principal approves the account, trading may then begin, and the signed options agreement is due back within 15 days after approval. That 15-day window is why a first trade can legitimately occur before the signed agreement arrives. The clue is that the trade and the approval happen on the same day.

A new options customer's account is approved by a Registered Options Principal on March 1 and trades begin. The signed options agreement has still not been returned by March 20. The firm must:

1. A.Cancel the ROP's approval retroactivelyWrong. Approval stands; the sanction is the closing-only restriction.
2. B.Restrict the account to closing transactions until the agreement is returnedCorrect. The 15-day deadline passed, so only closings are permitted.
3. C.Immediately liquidate all option positionsWrong-but-tempting. Forced liquidation is not required - the customer may close on her own schedule.
4. D.Continue normal trading; the agreement is a formalityWrong. The 15-day rule has real operational teeth.

Why: Exchange and FINRA options rules require the customer to return the signed options agreement within 15 days of account approval; failing that, no new opening positions may be established, though closing transactions are permitted. Citation: FINRA Rule 2360(b)(16). Takeaway: no agreement in 15 days = closing-only.