How many questions come from Chapter 16 (Introduction to Options) in the NISM Series V-D exam?

The chapter carries 13% weightage — roughly 20 of the 150 questions.

Is there negative marking in NISM Series V-D?

Yes — 0.1 mark is deducted for every wrong answer, so leave a question blank when you cannot eliminate options.

Where can I practise NISM Series V-D Chapter 16 questions for free?

Aumsetu's free V-D mock test has an untimed chapter-wise practice mode with an explanation after every question, in English and Hindi, plus ten full-length timed mock tests.

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NISM Series V-D · Chapter 16: Introduction to Options

ऑप्शंस का परिचय · NISM-Series-V-D: Mutual Fund – Specialized Investment Fund (SIF) Distributors Certification Examination

13% weightage · ~20 questions 150 questions · 180 minutes · 60% to pass · −0.10 per wrong answer 59 practice questions in our bank

What this chapter covers

Calls and puts, buyer and writer, strike and premium, moneyness, intrinsic and time value, the factors that drive an option's price (including volatility), the Greeks in outline, option pay-offs, and how options are settled and margined on Indian exchanges.

कॉल/पुट, खरीदार/लेखक, स्ट्राइक, प्रीमियम, मनीनेस, आंतरिक व समय मूल्य, ग्रीक्स और पे-ऑफ़।

What to master before the exam

Call versus put, buyer versus writer — rights, obligations and who pays the premium.
Moneyness (ITM / ATM / OTM) and splitting premium into intrinsic value and time value.
Pricing factors: spot, strike, time, volatility, interest rate, dividends — direction of each effect.
The Greeks (delta, gamma, theta, vega, rho) as sensitivities, and put-call parity in outline.
Pay-off and break-even for each of the four basic positions; exercise, assignment and settlement.

Exam tip: Thirteen marks. Break-even arithmetic (strike ± premium) and "which position has unlimited loss" are certain. Draw the four pay-off diagrams until you can sketch them blind.

Sample questions from this chapter

Five of the 59 questions in our free bank. Open the answer to see the explanation — every question in the mock test has one, in English and Hindi.

Question 1

An option contract gives the holder:

ऑप्शन अनुबंध धारक को क्या देता है?

The right, but not the obligation, to buy or sell the underlying at a predetermined priceपूर्व-निर्धारित मूल्य पर अंतर्निहित खरीदने या बेचने का अधिकार, पर दायित्व नहीं
The obligation to buyखरीदने का दायित्व
Ownership of the companyकंपनी का स्वामित्व
A guaranteed profitगारंटीड लाभ

Show answer & explanation

Answer: A — The right, but not the obligation, to buy or sell the underlying at a predetermined price
The option buyer pays a premium for the right (not obligation) to buy/sell; the writer receives the premium and must honour the contract if the buyer exercises.
ऑप्शन खरीदार अधिकार (दायित्व नहीं) हेतु प्रीमियम देता है; राइटर प्रीमियम पाता है और खरीदार के एक्सरसाइज़ करने पर अनुबंध निभाना होता है।

Question 2

A call option gives the buyer the right to ____, while a put option gives the right to ____.

कॉल ऑप्शन खरीदार को ____ का अधिकार देता है, जबकि पुट ऑप्शन ____ का अधिकार देता है।

buy; sellखरीदने; बेचने
sell; buyबेचने; खरीदने
buy; buyखरीदने; खरीदने
sell; sellबेचने; बेचने

Show answer & explanation

Answer: A — buy; sell
A call is the right to buy the underlying; a put is the right to sell it. The buyer chooses whether to exercise; the writer is obliged.
कॉल अंतर्निहित खरीदने का अधिकार है; पुट उसे बेचने का। खरीदार तय करता है कि एक्सरसाइज़ करे या नहीं; राइटर बाध्य होता है।

Question 3

In India, all exchange-traded index and stock options are:

भारत में, सभी एक्सचेंज-ट्रेडेड इंडेक्स व स्टॉक ऑप्शंस किस शैली के हैं?

European style (exercisable only on the expiry day)यूरोपियन शैली (केवल एक्सपायरी दिन एक्सरसाइज़-योग्य)
American style (exercisable any day)अमेरिकन शैली (किसी भी दिन एक्सरसाइज़-योग्य)
Bermudan styleबरमूडन शैली
Asian styleएशियन शैली

Show answer & explanation

Answer: A — European style (exercisable only on the expiry day)
A European option can be exercised only on the expiry day; an American option any time up to expiry. In India, all index and stock options are European style.
यूरोपियन ऑप्शन केवल एक्सपायरी दिन एक्सरसाइज़ हो सकता है; अमेरिकन किसी भी समय। भारत में सभी इंडेक्स व स्टॉक ऑप्शंस यूरोपियन शैली के हैं।

Question 4

The writer (seller) of a CALL option has:

कॉल ऑप्शन के राइटर (विक्रेता) पर क्या है?

An obligation to sell the underlying if the buyer exercisesखरीदार के एक्सरसाइज़ करने पर अंतर्निहित बेचने का दायित्व
A right to buyखरीदने का अधिकार
No obligation at allकोई दायित्व नहीं
A guaranteed profitगारंटीड लाभ

Show answer & explanation

Answer: A — An obligation to sell the underlying if the buyer exercises
The call writer receives the premium and is obliged to sell (deliver) the underlying if the call holder exercises the right to buy.
कॉल राइटर प्रीमियम पाता है और कॉल धारक द्वारा खरीदने का अधिकार एक्सरसाइज़ करने पर अंतर्निहित बेचने (डिलीवरी) को बाध्य होता है।

Question 5

The option premium is made up of:

ऑप्शन प्रीमियम किससे बना होता है?

Intrinsic value + time valueइंट्रिन्सिक वैल्यू + टाइम वैल्यू
Strike price − spot priceस्ट्राइक मूल्य − स्पॉट मूल्य
Lot size × tick sizeलॉट साइज़ × टिक साइज़
Margin + brokerageमार्जिन + ब्रोकरेज

Show answer & explanation

Answer: A — Intrinsic value + time value
Premium = intrinsic value (how much the option is in-the-money) + time value (the balance). ATM and OTM options have zero intrinsic value, so their premium is all time value.
प्रीमियम = इंट्रिन्सिक वैल्यू (ऑप्शन कितना इन-द-मनी है) + टाइम वैल्यू (शेष)। ATM व OTM ऑप्शंस की इंट्रिन्सिक वैल्यू शून्य होती है, इसलिए उनका पूरा प्रीमियम टाइम वैल्यू है।

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All V-D chapters

1. Investment Landscape · 5%2. Concept and Role of a Mutual Fund · 4%3. Legal Structure of Mutual Funds in India · 3%4. Legal and Regulatory Framework · 7%5. Scheme Related Information · 7%6. Fund Distribution and Channel Management · 4%7. NAV, Total Expense Ratio and Pricing of Units · 5%8. Taxation · 3%9. Investor Services · 10%10. Risk, Return and Performance of Funds · 5%11. Mutual Fund Scheme Performance · 5%12. Mutual Fund Scheme Selection · 10%13. Basics of Derivatives · 10%14. Understanding the Index · 5%15. Introduction to Forwards and Futures · 15%16. Introduction to Options · 13%17. Strategies using Equity Futures and Options · 9%18. Interest Rate, Instruments and Fixed Income · 6%19. Interest Rate Derivatives · 2%20. Exchange Traded Interest Rate Futures · 10%21. Exchange Traded Interest Rate Options · 6%22. Strategies using Interest Rate Derivatives · 6%

← Chapter 15: Introduction to Forwards and Futures Chapter 17: Strategies using Equity Futures and Options →

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