Formulas and concepts, with worked examples
Long call - Breakeven = strike + premium; max loss = premium; max gain = unlimited
Example: Buy 1 ABC Jan 40 call at $2.50: breakeven $42.50; max loss $250.
Long put - Breakeven = strike - premium; max gain = strike - premium (x100)
Example: Buy 1 ABC 40 put at $3: breakeven $37; max gain $3,700 if ABC goes to 0; max loss $300.
Covered call - Breakeven = stock cost - premium; max gain = strike - cost + premium
Example: Own 100 at $50, sell a 55 call for $2: breakeven $48; max gain (55 - 50 + 2) x 100 = $700; max loss $4,800.
Long margin account - Equity = LMV - debit; Reg T = 50% of purchase
Example: Buy $20,000 of stock on margin: deposit $10,000, debit $10,000. At LMV $18,000, equity = 18,000 - 10,000 = $8,000.
Long maintenance call price - Debit / 0.75
Example: With a $10,000 debit, a maintenance call hits when LMV falls below 10,000 / 0.75 = $13,333 (25% minimum).
Taxable-equivalent yield - Muni yield / (1 - tax bracket)
Example: A 3.3% muni for a 32% bracket investor: 3.3 / 0.68 = 4.85%.
Conversion parity - Par / conversion price = conversion ratio; parity = bond price / ratio
Example: $1,000 bond convertible at $25 = 40 shares. Bond at $1,080: parity stock price = 1,080 / 40 = $27.
Current yield - Annual interest / market price
Example: 6% coupon at 104 ($1,040): 60 / 1,040 = 5.77%.
Numbers and deadlines to memorize
| Item | Number / rule | Source |
|---|---|---|
| Reg T initial requirement | 50% of the purchase (or short sale proceeds) | |
| FINRA maintenance (long) | 25% of long market value | |
| FINRA minimum equity | $2,000 | |
| Pattern day trader rules | The $25,000 PDT minimum was replaced by intraday margin standards effective June 4, 2026 (firms may phase in until Oct 20, 2027). Check which version your exam tests. | |
| Settlement | T+1 regular way for stocks, corporate and municipal bonds | |
| Options contract size | 100 shares per standard equity option | |
| FINRA gift limit | $300 per person per year (effective March 30, 2026) | |
| 2026 IRA contribution limit | $7,500 ($1,100 catch-up at 50+) | |
| 2026 401(k) deferral limit | $24,500 | |
| Reg BI | Disclosure, care, conflict-of-interest and compliance obligations for recommendations to retail customers |
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Frequently asked questions
Can I bring a cheat sheet into the Series 7?
No. Reference materials are not permitted in the testing session; this sheet is for studying only.
Is there a lot of math on the Series 7?
More than any other exam in the sequence: options, margin, yields, munis and conversions.
Sources
- FINRA - Series 7 General Securities Representative Exam (accessed 2026-09-23)
- IRS - 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (accessed 2026-09-23)
- FINRA Regulatory Notice 26-05 - Gifts Rule amendments ($300 limit, effective March 30, 2026) (accessed 2026-09-23)
- FINRA Rule 4210 - Margin Requirements (accessed 2026-09-23)
- SEC - Regulation Best Interest (accessed 2026-09-23)
- Federal Reserve Regulation T (12 CFR Part 220) (accessed 2026-09-23)
- FINRA Regulatory Notice 26-10 - Intraday margin standards replace day-trading rules (effective June 4, 2026) (accessed 2026-09-23)
- FINRA - Series 7 Content Outline (2025) (accessed 2026-09-23)
- SEC - Shortening the securities settlement cycle to T+1 (compliance date May 28, 2024) (accessed 2026-09-23)