What is the correct sequence of steps for adding options trading to a new account?

The correct sequence of steps for adding options trading to a new account begins with determining suitability. This step is crucial because it assesses whether options trading is appropriate for the client's financial situation, investment experience, and risk tolerance. Once suitability has been established, the next step is to obtain principal approval. This approval is an essential part of the process that allows the brokerage firm to ensure that the accounts and the trading strategies align with regulatory requirements and firm policies.

Following principal approval, the account holder may proceed to execute their first trade in options. After conducting the trade, it is necessary to have a signed options application on file. This application is a formal document that outlines the account holder's understanding of the options trading risks and acknowledges their agreement to the trading rules.

This sequence emphasizes the importance of having a proper foundation, through both a suitability assessment and principal oversight, before engaging in options trading, ensuring that the client is well-informed and that the firm is compliant with regulatory obligations.