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The Canadian Investment Regulatory Organization (CIRO) has proposed changes to its proficiency rules including changes to the current mandatory courses offered by the Canadian Securities Institute (CSI). Under these proposed rules, subject to approval by the Canadian Securities Administrators (CSA), CIRO will be moving towards an assessment centric proficiency model for Approved Persons of Investment Dealers. For more information on CIRO’s proposed rules, please refer to the CIRO website. If you have any questions on how the proposed changes may impact you, please reach out to proficiency@ciro.ca.

What will you learn about?

  • Determining client suitability
  • Strategies based on market outlook and risk tolerance level
  • Entering orders
  • Executing orders on exchanges
  • Payment for options, exercise assignment, or option expiry
  • Tax implications of listed options trading

What is the course syllabus?

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Section 1 - A Review of the Risk and Reward Profiles of Common Option Strategies

Chapter 1 - Bullish Option Strategies

Topics covered in this chapter are:

  • Long Call
  • Married Put
  • Covered Call (also known as Covered Write)
  • Put Writing
  • Benchmark Indexes for Income-Producing Option Strategies
  • A Brief Review of Spreads, Straddles and Combinations
  • Bull Call Spread
  • Bull Put Spread

Chapter 2 - Bearish Option Strategies

Topics covered in this chapter are:

  • Long Put
  • Protected Short Sale
  • Covered Put Sale
  • Call Writing
  • Bear Put Spread
  • Bear Call Spread

Chapter 3 - Option Volatility Strategies

Topics covered in this chapter are:

  • An Introduction to Volatility
  • An Introduction to Option Sensitivities
  • Importance of Volatility to Options Trading
  • Short Volatility Strategies
  • Long Volatility Strategies

Section 2 - Opening and Maintaining Option Accounts

Chapter 4 - Conduct and Practices

Topics covered in this chapter are:

  • Options Regulation
  • Individual Registration Categories
  • Registrant Code of Ethics
  • Registrant Standards of Conduct
  • Trading and Sales Practices
  • Regulations Covering Registrants Employed by CIRO Investment Member Firms or Approved Participants of the Bourse

Chapter 5 - Opening and Maintaining Retail Option Accounts

Topics covered in this chapter are:

  • Completion and Approval of Option Account Application Forms
  • Significant Items of Information on the Option Account Application Form
  • Unanswered Questions on the Option Account Application Form
  • Responsibility for Final Acceptance of an Option Account
  • Completion of the Derivatives Trading Agreement Prior to Option Transactions
  • Risk Disclosure Statement
  • Applying a Suitability Concept to Option Recommendations
  • Managed Accounts and Simple Discretionary Accounts
  • Transfer of Option Accounts from One Member Firm to Another
  • Commissions

Chapter 6 - Client Margin Requirements

Topics covered in this chapter are:

  • Basic Margin Terms
  • Factors Affecting the Amount of Margin Required
  • CIRO and Bourse de Montréal Minimum Margin Requirements for Equity and index Option Strategies
  • Meeting Margin Calls
  • Capital Requirements for Firm and Market Maker Accounts
  • Member Firm Clearing Deposit Requirements for positions at the Clearing Corporation

Chapter 7 - Entering Listed Option Orders

Topics covered in this chapter are:

  • Essential Information Required for All Types of Orders
  • Order Ticket Information Unique to Options
  • A Generic Order Entry Screen
  • Types of Buy and Sell Orders
  • Types of Contingent Orders
  • Implied Orders and the Bourse De Montréal’s Implied Pricing Algorithm
  • The Bourse de Montréal’s User-Defined Strategies (UDS) Functionality

Chapter 8 - Canadian Tax Aspects of Listed Options Trading

Topics covered in this chapter are:

  • Professional versus Non-Professional Option Traders
  • Federal Tax Consequences for Non-Professional Traders
  • Federal Tax Consequences for Professional Traders
  • Tax Consequences for LEAPS® Investors
  • Allowable Use of Exchange-Traded Options in RRSPs, RRIFs and RESPs

Chapter 9 - Opening and Maintaining Institutional Option Accounts

Topics covered in this chapter are:

  • Opening Corporate Option Accounts
  • Opening Option Accounts for Acceptable Institutions
  • Know Your Client Rule
  • Permissible Option Transactions for Pension Plans, Insurance Companies and Trust Companies in Canada
  • Canadian Mutual Funds

Section 3 - The Role of Clearing Corporations and Exchanges in Listed Options Trading

Chapter 10 - The Role of Clearing Corporations in Listed Options Trading

Topics covered in this chapter are:

  • What is a Clearing Corporation?
  • Canadian Derivatives Clearing Corporation
  • Options Clearing Corporation
  • Functions of a Clearing Corporation

Chapter 11 - The Role of Exchanges in Listed Options Trading

Topics covered in this chapter are:

  • What is an Options Exchange?
  • Providing a Trading Forum
  • Adding and Deleting Option Classes
  • Adding and Deleting Option Series
  • Expiration Cycles on the Bourse
  • Setting Reporting Levels, Position Limits and Exercise Limits
  • Setting Capital and Margin Rules
  • Developing and Administrating Rules Governing the Marketplace and Approved Participants Dealing in Options

Chapter 12 - Listed Options Trading

Topics covered in this chapter are:

  • The Bourse de Montréal Inc.
  • The U.S. Exchanges

Chapter 13 - A Day in the Life of a Market Maker

Topics covered in this chapter are:

  • Obligations of Market Makers
  • How Market Makers Reduce or Eliminate Their Exposure

Section 4 - Contract Adjustments and Special Considerations and Risks of Non-Equity Options

Chapter 14 - The Impact of Stock Splits,Dividends and Rights Issues on Option Contracts

Topics covered in this chapter are:

  • Adjustments for Stock Splits
  • Adjustments for Stock Dividends
  • Cash Dividends
  • Impact of Dividends on Option Premiums
  • Rights Issues

Chapter 15 - Stock Index Options

Topics covered in this chapter are:

  • Unique Characteristics and Risks of Index Options
  • Key Index Option Contracts

Chapter 16 - Currency Options

Topics covered in this chapter are:

  • Exchange Rate Quoting Convention
  • Selecting the Right Option
  • Unique Characteristics and Risks of North American Listed Currency Options

How will you learn?

CSI’s online learning system helps you meet your study goals. You’ll benefit from:

  • Textbook readings available in PDF, eBook and printed format
  • Course materials accessed through your computer, laptop, tablet, or phone, or by downloading the e-book for offline reading
  • Learning objectives that keep you focused
  • Online review questions and activities to assess your progress
  • Annual course updates to ensure you’re learning the most current and up-to-date practical material
  • Online assistance from CSI’s academic support specialists

Course Completion, Wall Certificate and Digital Badge

Upon successfully completing this course, you will be able to download a Notice of Course Completion available through your student profile. This will remain on your profile as formal confirmation of course completion.

You can also accept a digital badge through your student profile after successful course completion. Digital badges are portable image files that allow you to share your credentials across the web. You can post them to your email signature, personal website, social media channels—even to electronic copies of your resume.

CSI will mail you a wall certificate within 4 – 6 weeks of course completion. Frames to display your certificate are available. Please ensure that your First and Last Name on your profile matches your First and Last Name on your Government Issued Photo identification – this will ensure you receive an accurate certificate.

CSI will be pleased to issue an Honours Certificate to all students who obtain a final course mark of 85% or higher.

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