Taxmann Equity Derivatives by National Institute of Securities Markets Edition August 2026

Equity Derivatives National Institute of Securities Markets Edition 2026

Equity Derivatives National Institute of Securities Markets Edition 2026

Description

Equity Derivatives is a complete, self-contained textbook on the Indian equity derivatives market, written by the National Institute of Securities Markets (NISM) and published by Taxmann. The book covers the basics of equity derivatives, trading strategies using equity futures and equity options, clearing, settlement and risk management, and the regulatory environment in which the equity derivatives markets operate in India. Across ten chapters it builds from the ground up—what a derivative is and how these markets evolved, how a stock index is constructed and maintained, how futures and options contracts are specified, priced and settled, how a dozen distinct option strategies are assembled and what each pays off, how orders are matched and margins computed on an Indian exchange, and finally how the whole edifice is governed, accounted for, taxed and policed.

Its distinguishing quality is method. Concepts are never left abstract. Contract specifications are dissected against live NSE and BSE quotes. The four index-weighting methodologies are computed side by side from a single data set, so the reader can see precisely how the choice of method changes the answer. Every hedge is run through both a rising and a falling market, demonstrating that the effective price is locked either way. Each option strategy arrives with a strike-and-premium table, a payoff computed at successive spot levels, an identified break-even, and a chart—and the strategies are taught as extensions of one another, a collar as an extension of the covered call, a butterfly as a short straddle with its tails capped. The book is candid about the limits of the page, too: it tells the reader that the best way to understand the trading mechanism is to watch a live screen, and that horizontal and diagonal spreads simply cannot be drawn as payoff diagrams.

This March 2026 version is written against SEBI’s recent overhaul of the equity derivatives framework, with footnoted circular references running to February 2026: the expiry-day rationalisation under which NSE has adopted Tuesday and BSE Thursday, the rise in minimum contract value to ₹15 lakh, the delta-adjusted Future Equivalent Open Interest formulation, the tightened algorithmic trading rules, the phased Cyber Security & Cyber Resilience Framework, STT rates drawn from the Union Budget 2026-27, and a margin change that takes effect only on 5th May 2026. Because each regulatory statement is footnoted to its source circular number and date, the book doubles as a reference whose every position can be independently checked.

The Present Publication is the March 2026 Workbook Version, developed by NISM Certification Team with subject matter expert Dr. Aparna Bhat; reviewed by the Examination Committee comprising stock exchange representatives and industry experts. It is published exclusively by Taxmann, with the following noteworthy features:

• [Authoritative Authorship] Written by the institution that sets the standard—content created and reviewed by NISM, SEBI’s capacity-building arm, rather than a third-party interpretation of it
• [Worked Numbers, Not Definitions] Index computations, futures and option payoffs, margin calculations, break-even points and cost build-ups are all carried out on the page
• [Every Payoff Mapped] Payoff tables and charts for futures and for every option strategy that admits a diagram, each with maximum profit, maximum loss and break-even stated explicitly
• [Formulae Stated and then Applied] Cost of carry in simple, discrete and continuously compounded forms; the Black-Scholes call and put equations with every variable defined; portfolio beta; and the theoretical settlement price
• [Live Market Data as Teaching Material] A Nifty futures quote from 3rd October 2025 and Nifty call and put option quotes are taken apart field by field
• [Both Sides of Every Trade] Options are analysed from the buyer’s and the writer’s perspective; hedges are tested against both favourable and adverse price moves
• [Footnoted to Source] Regulatory statements carry the SEBI circular reference number and date, making the book verifiable and updatable rather than merely assertive
• [Self-testing Built In] Each chapter opens with Learning Objectives and closes with sample questions in MCQ and True/False form, with answers indicated.
• [Practice Over Theory] Order types, trader workstation layout, corporate action adjustments, trading cost arithmetic and grievance procedures get the same careful treatment as pricing models
• [A Lasting Desk Reference] The margin stack, position limits, accounting entries per ICAI guidance notes and AS-11, and the taxation of F&O income keep the book useful long after a first reading

The coverage of the book is as follows:

• Chapter 1 — Basics of Derivatives
• Chapter 2 — Understanding the Index
• Chapter 3 — Introduction to Forwards and Futures
• Chapter 4 — Introduction to Options
• Chapter 5 — Strategies Using Equity Futures and Equity Options
• Chapter 6 — Trading Mechanism
• Chapter 7 — Introduction to Clearing and Settlement System
• Chapter 8 — Legal and Regulatory Environment
• Chapter 9 — Accounting and Taxation
• Chapter 10 — Sales Practices and Investors Protection Services

Every chapter is built on the same internal skeleton, so a reader who learns to navigate one can navigate all ten.

• Learning Objective — Each chapter opens with a boxed Learning Objectives panel, setting out precisely what the chapter commits to covering. Once the chapter has been read, the same panel serves as a revision checklist
• Continuity Before New Material —A short bridging passage joins what has just been learned to what follows. The sequencing is disciplined throughout: beta is defined before beta-adjusted hedging appears, the Greeks before delta-hedging, open interest before the FutEq OI formulation
• Worked Examples — Every illustration follows the same sequence: the setup and its assumptions, a table laying out the position, the outcome split into labelled branches—Case I: Stock rises to Rs. 1,580 on expiry day, Case II: Stock falls to Rs. 1,480—and a closing line drawing out what the arithmetic was meant to show. Positions with several possible outcomes extend to a third and fourth branch. Tables and payoff charts carry no numbering and appear inline at the point of argument, so there is no figure apparatus to flip back and forth between
• Sourcing Held in the Footnotes — Regulatory authority sits at the foot of the page rather than in the prose. Footnotes run continuously from 1 to 13 across the entire book instead of restarting with each chapter, and carry SEBI circular reference numbers and dates or source URLs—leaving the main text uncluttered while keeping every regulatory statement traceable
• Test — Each chapter ends with a boxed Sample questions panel: numbered items in (a)–(d) or True/False form, with the correct option in bold. They are framed as caselets and computations rather than recall prompts, so the closing panel puts the chapter’s arithmetic to work rather than just its vocabulary

About the Author

National Institute of Securities Markets :  The National Institute of Securities Markets (NISM) is an educational institution established in 2006 by the Securities and Exchange Board of India (SEBI), the regulator of India’s securities markets. Its creation followed the Union Finance Minister’s 2005–06 Budget announcement, which called for an institution dedicated to teaching, training, and conducting research in the securities markets. Guided by its vision to ‘lead, catalyse, and deliver educational initiatives that enhance the quality of securities markets,’ NISM offers a spectrum of capacity-building programs, ranging from basic financial literacy workshops to full-time postgraduate courses. Six Schools of Excellence drive its mission: the School for Certification of Intermediaries, the School for Securities Education, the School for Investor Education and Financial Literacy, the School for Regulatory Studies and Supervision, the School for Corporate Governance, and the School for Securities Information and Research. These Schools collaborate to professionalise the securities markets further.