Security Futures Training - Module 1: Stocks and Stock Options

Module 1: Stocks and Stock Options is intended primarily for futures professionals as an introduction to securities and securities law concepts. FINRA will not require broker/dealers to administer the content of Module 1 to securities registrants. Firms should decide on their own whether their employees would benefit from the basic securities overview.

Content Outline


Introduction to Stocks

  • Capital formation
  • Shares in Corporate Ownership
  • Dividends
  • Common Stock
  • Preferred Stock
  • Restricted Stock
  • ADRs
    • Corporate Actions
    • Stock splits
    • Reverse stock splits
    • Mergers and takeovers
    • Spin-offs

Stock and Stock Options Markets and Clearing Organizations

  • The Nasdaq Stock Market
  • NYSE, AMEX and Regional Stock Exchanges
  • Intermarket Trading System
  • Electronic Communications Networks
  • Options Exchanges
  • Options Clearing Corporation
  • Product fungibility

Trading Stocks

  • Price quotation conventions
  • Short selling
    • Uptick rule
    • Stock loan
    • Affirmative determination
    • Dividends
  • Types of orders (different than those in the futures markets)
    • All-or-none orders
  • Immediate-or-cancel orders
  • Fill-or-kill orders
  • Trade settlement
  • Insider trading
  • Delayed openings
  • Trading halts
  • Circuit breakers

Stock Options and Stock Index Options

  • Basic description
  • Synthetics

Stock Market Analysis and Related Statistical Measures

  • Stocks by sector
  • Stocks by strategy and Industry outlook
    • Growth stocks
    • Value stocks
    • Income stocks
  • Stocks by market capitalization
    • Large Cap
    • Mid Cap
    • Small Cap
  • Statistical measures
    • Alpha
    • Beta

Corporate Announcements and Other News and Information

  • Quarterly earnings reports
  • Corporate statements between reports
  • Insider filings
  • Short interest reports

Income Statement and Balance Sheet

  • General description
  • Earnings per share
  • Price/Earnings ratio
  • Dividend yield)
  • Book value
  • Liquidity measures
    • Current assets
    • Quick assets
    • Current liabilities
    • Working capital
    • Current ratio
    • Acid-test ratio
    • Cash flow

Margin for Stocks and Stock Options

  • Initial and maintenance margin for stock purchases
  • Initial and maintenance margin for short stock positions
  • Options margin
    • Premium payments
    • Margin for short positions

Securities Investor Protection Corporation

  • Purpose of SIPC
  • Coverage limits
  • Coverage amounts