Equity Derivatives Certification Examination Overview

Equity Derivatives are trading instruments whose value is at least partly derived from one or more underlying asset classes. The Futures and Options contracts in the derivatives segment are one of the most commonly-traded derivatives products.

What are the course objectives?
  • Know the basics of the Indian equity derivatives market.
  • Understand the various trading strategies that can be built using futures and options on both stocks and stock indices.
  • Understand the clearing, settlement and risk management as well as the operational mechanism related to equity derivatives markets.
  • Know the regulatory environment in which the equity derivatives markets operate in India.
Who should enroll for this training?

Graduates.
Post Graduates.
Business People

Test Details ?

 Fees Details

Name of Module: NISM-Series-VIII: Equity Derivatives Certification Examination

Fees (Rs.) Test Duration(in minutes) No. of Questions Maximum Marks Pass Marks*(%) Certificate Validity(in years)#

1500+

120

100

100

60

3

* Negative marking – 25% of the marks assigned to the question.
+ Payment gateway charges extra.
# Passing Certificate will be issued only to those candidates who have furnished/updated their Income Tax Permanent Account Number (PAN) in their registration details.

Equity Derivatives Syllabus 

CHAPTER-1: Basics of Derivatives

  • Basics of derivatives
  • Evolution of derivatives market
  • Indian derivatives Market
  • Market participants
  • Types of derivatives markets
  • Significance of derivatives
  • Various risk faced by the participants in derivatives

CHAPTER-2: Understanding Index

  • Introduction to Index
  • Significance and economic purpose of Index
  • Types of Indices
  • Attributes of an Index and concept of impact cost
  • Index management
  • Major Indices in India
  • Applications of Index

CHAPTER-3:  Introduction to Forwards and Futures

  • Introduction to Forwards and Futures contracts
  • Payoff Charts for Futures contract
  • Futures pricing
  • Cash and carry / Non-arbitrage model for futures pricing
  • Expectancy model of futures pricing
  • Concept of convergence of cash and futures prices
  • Basic differences in Commodity, Equity and Index Futures
  • Uses of futures
  • Role of different players in futures market
  • Use of futures contract as an effective instrument for managing risk
  • Strategies for hedging, speculation, and arbitrage in futures market

Chapter-4: Introduction to Options

  • Basics of options
  • Payoff Charts for Options
  • Basics of options pricing and option Greeks
  • Fundamentals of options pricing
  • Overview of Binomial and Black-Scholes option pricing models
  • Basics of Option Greeks
  • Uses of Options

Chapter-5: Option Trading Strategies

  • Options spreads and their payoff charts
  • Straddle: market view and payoff charts
  • Strangle: market view and payoff charts
  • Covered Call: market view and payoff charts
  • Protective Put: market view and payoff charts
  • Collar: market view and payoff charts
  • Butterfly spread: market view and payoff charts

Chapter-6: Introduction to Trading Systems

  • Trading Systems, corporate hierarchy, order types and conditions
  • Selection criteria of Stock for trading
  • Selection criteria of Index for trading
  • Adjustments for Corporate Actions
  • Position Limits
  • Using daily newspapers to track futures and options

Chapter-7:  Introduction to Clearing and Settlement system

  • Clearing Members, their role and eligibility norms
  • Clearing Mechanism and computation of open positions
  • Settlement Mechanism for stock and index futures and options
  • Understanding marginal and mark to market under SPAN
  • Risk Management features and position limits

Chapter-8: Legal and Regulatory Environment

  • Securities Contract (Regulation) Act, 1956
  • Securities and Exchange Board of India Act, 1992
  • Important rules and regulations in derivatives trading
  • Regulation in clearing & settlement and risk management
  • Major recommendations of the L C Gupta Committee
  • Major recommendations of the J R Verma Committee

Chapter-9: Accounting and Taxation

  • Accounting of Futures and Options contracts
  • Taxation of Derivative transaction in securities

Chapter-10:  Sales Practices and Investors Protection Services

  • The risk profile of the investors.
  • Importance of profiling clients in sales process
  • Importance of KYC
  • Documents required by the investors to trade in Derivatives contract
  • Best practices in derivatives sales
  • Investors Grievance Mechanism