NCFM DERIVATIVES MARKET

CHAPTER 1: Introduction to Derivatives 

• Types of Derivative Contracts,
• History of Financial Derivatives Markets,
• Participants in a Derivatives Market,
• Economic Function of the Derivative Market

CHAPTER: 2 Understanding Interest Rates and Stock Indices 

• Understanding Interest rates,
• Understanding the Stock Index,
• Economic Significance of Index Movements,
• Index Construction Issues,
• Desirable Attributes of an Index,
• Applications of Index

CHAPTER 3: Futures Contracts, Mechanism and Pricing Forward Contracts 

• Limitations of forward markets,
• Introduction to Futures,
• Distinction between Futures and Forwards Contracts,
• Futures Terminology,
• Trading Underlying vs. Trading Single Stock Futures,
• Futures Payoffs,
• Pricing Futures,
• Pricing Stock Futures.

CHAPTER 4: Application of Futures Contracts 

• Understanding Beta,
• Numerical illustration of Applications of Stock Futures

CHAPTER 5: Options Contracts, Mechanism, and Applications 

• Option Terminology,
• Comparison between Futures and Options,
• Options Payoffs,
• Application of Options

CHAPTER 6: Pricing of Options Contracts and Greek Letters 

• Variables affecting Option Pricing,
• The Black Scholes Merton Model for Option Pricing (BSO),
• The Greek

CHAPTER 7: Trading of Derivatives Contracts 

• Futures and Options Trading System,
• The Trader Workstation,
• Futures a nd Options Market Instruments,
• Criteria for Stocks and Index Eligibility for Trading,
• Charges

CHAPTER 8: Clearing and Settlement 

• Clearing Entities,
• Clearing Mechanism,
• Settlement Procedure,
• Risk Management,
• Margining System

CHAPTER 9: Regulatory Framework 

• Securities Contracts (Regulation) Act, 1956,
• Securities and Exchange Board of India Act, 1992,
• Regulation for Derivatives Trading,
• Adjustments for Corporate Actions

CHAPTER 10 : Accounting for Derivatives 

• Accounting for futures,
• Accounting for options,
• Taxation of Derivative Tra nsaction in Securities