I. 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

 II. 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

 III. 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

 IV. 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 

 V. Option Trading Strategies

  • Option 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

 VI. 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

 VII. 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 margining and mark to market under SPAN
  • Risk Management features and position limits

VIII. 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

 IX. Accounting and Taxation

  • Accounting of Futures and Options contracts
  • Taxation of Derivative transaction in securities
  • Sales Practices and Investors Protection Services
  • 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