Option Position Limits and Side-of-Market Aggregation
Under FINRA Rule 2360, when determining compliance with option position limits, which of the following positions are aggregated on the SAME side of the market?
FINRA position limits aggregate contracts on the SAME side of the market: Bullish (Long Calls + Short Puts) and Bearish (Long Puts + Short Calls).
Complete Analysis & Legal Rationale
FINRA monitors position limits to prevent market manipulation. Position limits aggregate contracts based on directional sentiment: The Bullish side aggregates Long Calls and Short Puts; the Bearish side aggregates Long Puts and Short Calls.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Both positions are bullish and thus aggregated on the bullish side of the market.
Long calls (bullish) and long puts (bearish) are opposite market sides (straddle).
Long calls and short calls are opposing sides.
Short calls (bearish) and short puts (bullish) are opposing sides.
Official Standard: Mandates strict limits on aggregate options contracts on the same side of the market.