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    NISM Series VIIISEBI mandatoryTier S

    Equity DerivativesCertification Guide.

    The gold standard for anyone in the equity derivatives space. Covers futures, options, Greeks, clearing & settlement, and SEBI regulations. Mandatory for anyone working at a brokerage in the F&O segment.

    Rohit Singh
    Rohit SinghMr. Chartist
    May 7, 2026
    12 min read

    Difficulty

    Intermediate

    Suggested prep: 20-30 days

    Negative marking

    25%

    Avoid blind guessing.

    Validity

    3 years

    Computer-Based Test (CBT)

    Priority

    Rank 1

    Derivatives track

    Database-led overview

    What this certification is really testing.

    This template pulls directly from the NISM database so the article stays factual, structured, and easy to scan before you register.

    Ideal for

    Aspiring F&O traders

    Brokerage firm employees

    Anyone dealing in equity derivatives

    Retail traders wanting to understand derivative regulations

    Career paths

    F&O Trader at Brokerage Firm

    Derivatives Analyst

    Risk Manager

    Proprietary Trading Desk

    Sub-Broker (F&O Segment)

    Mandatory for

    Approved users of trading member (equity derivatives segment)

    Sales personnel of equity derivatives trading members

    Associated persons dealing in equity derivatives

    Syllabus intelligence

    Study by chapter weightage, not by guesswork.

    The highest scoring chapters carry 78% of the paper. Start there, then use the low-weight chapters for polish.

    018%Basics of Derivatives022%Understanding Index0325%Introduction to Forwards and Futures0425%Introduction to Options053%Strategies using Equity Futures and Options064%Trading Mechanism0713%Clearing and Settlement System0815%Legal and Regulatory Environment093%Accounting and Taxation102%Sales Practices and Investor ProtectionCHAPTER WEIGHTAGE MAP

    High-weightage focus

    Introduction to Forwards and Futures

    25%

    Futures contract specifications lot size, expiry | Cost of Carry model and futures pricing | Basis and convergence at expiry

    Introduction to Options

    25%

    Call and Put options rights vs obligations | Option premium = Intrinsic Value + Time Value | Moneyness ITM, ATM, OTM

    Legal and Regulatory Environment

    15%

    SEBI Act 1992 and powers of SEBI | Securities Contracts (Regulation) Act 1956 SC(R)A | SEBI (Stock Brokers) Regulations 1992

    Clearing and Settlement System

    13%

    Role of clearing corporation (NSE Clearing / Indian Clearing Corp) | Novation clearing corp as CCP | SPAN Margin vs Exposure Margin

    Key concepts to remember

    Futures Price = Spot [1 + r(t/365)] Cost of Carry model

    Basis = Spot Price Futures Price (converges to zero at expiry)

    Call buyer: unlimited profit, max loss = premium paid

    Put buyer: max profit = Strike Premium, max loss = premium paid

    Option writer (seller) has UNLIMITED risk (for calls) or Strike-level risk (for puts)

    Delta: 0 to 1 for calls, 1 to 0 for puts measures price sensitivity

    Gamma: rate of change of Delta highest for ATM options near expiry

    Theta: time decay always negative for option buyers

    Vega: sensitivity to volatility all options have positive Vega

    Mark-to-Market: daily settlement profits credited, losses debited

    SPAN margin covers probable losses; Exposure margin covers extreme scenarios

    Position limits are set at client, trading member, and market-wide levels

    Important formulas

    Futures Price = Spot Price [1 + r (days to expiry / 365)]

    Intrinsic Value (Call) = max(0, Spot Price Strike Price)

    Intrinsic Value (Put) = max(0, Strike Price Spot Price)

    Time Value = Option Premium Intrinsic Value

    P&L (Futures) = (Exit Price Entry Price) Lot Size Number of Contracts

    Contract Value = Price Lot Size

    Initial Margin = Contract Value Margin %

    Put-Call Parity: C + PV(K) = P + S (for European options)

    STT on Sell side of Futures = 0.0125% of turnover

    STT on Sell side of Options (in-the-money at exercise) = 0.0625% of intrinsic value

    Preparation system

    A clear way to study this module.

    Use the database strategy as the practical order of attack: official workbook first, high-weightage chapters next, then mocks and exam-day control.

    Study strategy

    Read the NISM workbook cover-to-cover FIRST don't start with mock tests

    Focus 60% of your time on Chapters 3 + 4 (Futures & Options) they carry 50% weightage combined

    Memorize all formulas for futures pricing, intrinsic value, and P&L calculation

    Chapter 8 (Legal & Regulatory) is 15% don't skip the SEBI regulations and position limits

    Practice at least 5 numerical P&L and margin calculations daily

    Take 3-4 full-length mock tests in the last 5 days of preparation

    Understand Greeks conceptually you won't need to calculate Black-Scholes, but understand direction of Delta/Theta/Vega

    Make a cheat sheet of key differences: American vs European, Futures vs Forwards, SPAN vs Exposure margin

    Exam-day tips

    You get 72 seconds per question flag numerical questions and revisit later

    With 0.25 negative marking, only guess if you can eliminate 2+ wrong options

    Attempt regulatory questions first (easier, require recall not calculation)

    For P&L questions, always check if the question says 'per lot' or 'per share'

    Read all 4 options carefully NISM often has closely worded answer choices

    Keep 20 minutes buffer at the end to review flagged questions

    Scoring warning

    The pass mark is simple. The paper is not.

    Because this paper has negative marking, precision matters more than speed. Attempt the sure questions first, then return to calculations and close-call options.

    Open NISM Portal

    Common mistakes

    Confusing 'buyer' and 'writer' payoffs the writer has OPPOSITE payoff to buyer

    Forgetting that basis converges to zero at expiry, not immediately

    Mixing up SPAN margin (covers probable loss) with Exposure margin (covers extreme moves)

    Ignoring STT implications it differs for futures vs options and buy vs sell side

    Treating F&O income as capital gains instead of business income for tax purposes