NCFM Derivatives Market (Dealers) study plan

Define and distinguish forwards, futures, options and swaps, stating for each the payoff structure, obligation versus right, and one Indian market example

Explain the contract specifications of index futures and stock futures on Indian exchanges: lot size, tick size, contract cycle, expiry and settlement mode

Compute mark-to-market cash flows for a long and a short futures position across a three-day price path, including daily MTM debits and credits

Illustrate the mechanics of margins and daily settlement using a worked example with initial margin, maintenance margin and a margin call

Calculate option payoffs and profits at expiry for long and short call and put positions, and mark the break-even and maximum loss on each diagram

Explain put-call parity and verify it numerically with one index option example, identifying which leg is mispriced if parity fails

Describe the trading lifecycle from order entry to trade confirmation on an exchange terminal, naming order types (market, limit, stop-loss, IOC) and their matching behaviour

Outline the roles of trading member, clearing member and clearing corporation in the Indian derivatives market and how each handles default

Trace the end-of-day settlement process for futures: MTM settlement, final settlement price determination and cash settlement of index contracts

Explain the margining framework - initial margin, exposure margin, and the role of SPAN-style portfolio margining - and compute a combined margin requirement for a two-leg portfolio

Describe the settlement calendar, T+1 settlement for cash-segment leg of options exercise, and the treatment of physical settlement in stock derivatives

Identify the consequences of a member default: close-out, settlement guarantee fund usage and client-level segregation of collateral

Summarise the regulatory architecture: the role of SEBI, exchange regulation departments, and the clearing corporation in oversight of derivatives

State eligibility criteria for stocks to be admitted to the derivatives segment, including minimum market-wide position limits and liquidity screens

Explain position limits at client, trading member and market level, and compute the applicable limit for a client holding positions across two members

Describe know-your-client requirements, unique client code, and the rules on client margin collection and upstreaming by members

Compute value at risk for a single futures position using a parametric approach and interpret the result at a stated confidence level and horizon

Explain delta, gamma, theta, vega and rho, and estimate how an option portfolio's value changes for a given move in the underlying and in implied volatility

Apply basic hedging constructions - protective put, covered call, and a delta-neutral futures hedge - and evaluate the residual risk each leaves open

Describe concentration risk, liquidity risk and model risk in a dealer's book, and name one control for each

Draft a client suitability assessment: collect risk profile, investment objective and prior derivatives experience, and map each to appropriate product categories

Explain the distinction between execution-only and advisory dealing, and state what disclosures and risk acknowledgements must precede a client's first derivatives trade

Identify prohibited sales practices - assured returns, misleading volatility claims, churning, unauthorised trading - and describe the consequence for the dealer and the firm

Apply conflict-of-interest rules to a scenario where the dealer's proprietary book trades ahead of a client recommendation

Explain client money and collateral handling: segregation, permitted uses of client funds, and the prohibition on using one client's collateral for another

Describe record-keeping, order-ticket and audit-trail obligations for a dealer, and list the documents that must be retained and for how long

Work through three ethics scenarios - front-running, mis-selling an option strategy, and concealing a margin shortfall - and state the correct action and the rule engaged

Summarise grievance redressal channels, including the exchange investor protection mechanism and arbitration for client disputes

Complete two timed full-length mock tests under exam conditions and score each by domain to identify weak areas

Re-derive from memory the core formulas: MTM, margin requirement, option payoff and break-even, put-call parity, and parametric VaR

Review every incorrect mock answer and write a corrected one-line explanation for each, then re-test those items after 48 hours

Recite the key regulatory thresholds, position limit tiers and disclosure obligations without notes