Name: NISM Series 8 Equity Derivatives Mock Tests
Brand: MODELEXAM
SKU: NISM8-MOCK-ALL

Unit 1: Basics of Derivatives

1.1 Define the term 'Derivatives'
1.2 Know brief history of financial derivatives and list the factors influencing the growth of derivatives markets globally
1.3 Know the history of derivatives in India and state the derivative products traded in India
1.4 List different types of market participants and their roles
1.5 Differentiate between OTC and exchange traded markets
1.6 Explain the importance of derivatives
1.7 List various risks faced by the participants in derivatives markets

Unit 2: Understanding Index

2.1 Explain the term 'Index'
2.2 Understand the economic purpose of index
2.3 Discuss various types of Indices and their computation
2.4 List important attributes for construction of an Index and understand the concept of 'impact cost'
2.5 Understand how index is constructed, maintained and revised
2.6 List some of the major equity indices in India
2.7 Understand various applications of indices

Unit 3: Introduction to Equity Futures and Forwards

3.1 Explain the term Forward contract, list essential features and major drawbacks of forward contracts
3.2 Explain the term Futures contract, list salient features and limitations of Futures contract
3.3 Discuss the contract specification of Exchange Traded Equity Futures
3.4 Understand the key terminology associated with futures contracts
3.5 Compare the advantages and disadvantages of forwards and futures
3.6 Illustrate payoffs for Futures and draw payoff charts for Long and Short Futures
3.7 Explain the Cost-of-carry model and Expectations model for futures pricing
3.8 Understand the concept of convergence of cash and futures prices
3.9 Describe uses/applications of equity futures

Unit 4: Introduction to Equity Options

4.1 Explain the term option contract and understand the options terminology
4.2 Discuss the contract specifications of Exchange Traded Equity Options contracts
4.3 Understand the concept of Moneyness of an option and define ITM, ATM and OTM
4.4 Describe the intrinsic value and time value of Options
4.5 Explain the payoff diagrams of call and put options for the buyer and writer of these options
4.6 Differentiate between futures and options contracts in terms of rights and obligations of buyers and sellers
4.7 List the determinants of option price, know the impact of these factors on the value of calls and puts and understand option greeks
4.8 Outline the commonly used models for options pricing
4.9 Understand the concept of implied volatility and its importance
4.10 Analyse the profitability of call and put options of different strikes from the perspectives of buyer and seller of these options

Unit 5: Strategies using Equity Futures and Equity Options

5.1 Discuss different strategies for hedging, trading and arbitrage using equity futures
5.2 Understand various option trading strategies for hedging, trading and arbitrage purposes
5.3 Describe the principle of Put-Call Parity and Synthetic Option Strategies
5.4 Explain Delta-hedging with suitable examples
5.5 Discuss how information from Open Interest, Volume, futures price and Put-Call ratio is used for formulating trading strategies

Unit 6: Trading Mechanism

6.1 Know the entities involved in the trading, market timing, order management, etc.
6.2 Explain the eligibility criteria of stocks for derivatives trading
6.3 Describe the criteria for selection of an index for derivatives trading
6.4 Understand the adjustments made to derivatives contracts for various corporate actions
6.5 Know various trading costs such as Brokerage, Exchange charges, SEBI fee, GST, STT, etc.
6.6 Briefly introduce the algorithmic trading
6.7 Know sources to track the futures and options data

Unit 7: Clearing, Settlement and Risk Management

7.1 Understand the clearing and settlement mechanisms
7.2 Know various entities involved in clearing and settlement process and their roles
7.3 Understand the clearing mechanism and calculate open positions
7.4 Understand the responsibilities of a clearing corporation and interoperability
7.5 Understand settlement Mechanism, Daily Settlement Price and Final Settlement Price
7.6 Calculate MTM settlement and final settlement of equity derivatives
7.7 Know the salient features of the exchange risk management measures
7.8 Understand margining and mark to market (MTM). Discuss margin collection processes.
7.9 Briefly discuss about Settlement Guarantee Fund (SGF) and Investor Protection Fund (IPF)

Unit 8: Legal and Regulatory Environment

8.1 Know important provisions of Securities Contract (Regulation) Act, 1956
8.2 Define the role of SEBI in regulating exchange traded equity derivatives market
8.3 List important rules and regulations pertaining to trading in equity derivatives market
8.4 Know important rules and regulations related to clearing, settlement and risk management
8.5 Know the eligibility criteria for membership on derivative segment

Unit 9: Accounting and Taxation

9.1 Explain accounting treatment of futures and options contracts
9.2 Understand the taxation of derivative transactions and describe the applicability of STT

Unit 10: Codes of Conduct and Investor Protection Measures

NISM EDCE Syllabus	Weightage Marks
1: Basics of Derivatives	10 marks
2: Understanding Index	5 marks
3: Introduction to Forwards and Futures	20 marks
4: Introduction to Options	20 marks
5: Strategies using Equity Futures and Equity Options	10 marks
6: Trading Mechanism	10 marks
7: Clearing, Settlement and Risk Management	10 marks
8: Legal and Regulatory Environment	5 marks
9: Accounting and Taxation	5 marks
10: Sales Practices and Investor Protection Measures	5 marks

NISM Series VIII: Equity Derivatives Certification Exam