Series XVI
Commodity Derivatives
50 questionsPass mark 60%Negative marking 25% / wrong answer
NISM Series XVI practice questions
150 questions. Each answer is explained.
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Learn these topics
Practise one unit at a time
- Introduction to Commodity Markets15 questions
- Commodity Futures22 questions
- Commodity Options22 questions
- Commodity Indices12 questions
- Uses of Commodity Derivatives23 questions
- Trading Mechanism13 questions
- Clearing Settlement and Risk Management of Commodity Derivatives20 questions
- Accounting and Taxation8 questions
- Legal & Regulatory Environment of Commodity Derivatives8 questions
- Code of Conduct and Investor Protection Measures7 questions
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
NISM Series XVI Commodity Derivatives
Exam rules read on NISM's site on 3 October 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 3 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
5 sample questions with answers
The other 145 are on the unit pages above, written out the same way.
Q1An imported material costs USD 400 per tonne. The price rises to USD 420 while USD-INR falls from 85 to 82. Ignoring every other cost, what is the change in its INR cost per tonne?
Option A. A decrease of ₹440
Why it is wrong: The magnitude is right but the direction is reversed.
Option B. An increase of ₹1,700
Why it is wrong: This applies the USD 20 rise at the old exchange rate and ignores the rupee’s strengthening.
Option C. A decrease of ₹1,200
Why it is wrong: This captures only the currency saving on the original USD 400 price.
Option D. An increase of ₹440 — Correct answer
Answer: D. A domestic currency price can reflect both the foreign commodity price and the currency conversion rate. Initial cost = USD 400 × ₹85 per USD = ₹34,000 per tonne. New cost = USD 420 × ₹82 per USD = ₹34,440 per tonne. The change is ₹34,440 − ₹34,000 = ₹440 higher. Currency appreciation offsets part, but not all, of the foreign-price increase. Remember: Recalculate the complete converted price when both price and currency move.
Hint, shown before you answer in practice mode: Common mistake: Adding isolated percentage changes without accounting for their combined effect.
XVI-008mediumconceptual
Q2Two analysts use the same option-pricing model and all the same inputs except volatility. One varies volatility until the model value equals the observed market premium. What has been estimated?
Option A. The past standard deviation of the commodity’s daily returns
Why it is wrong: Historical volatility is measured from past returns rather than obtained by matching an option premium.
Option B. The option’s delta, worked out without relying on any model
Why it is wrong: Delta is price sensitivity to the underlying, not the volatility parameter being solved for.
Option C. A guaranteed level of future realised volatility for the commodity
Why it is wrong: An inferred market parameter is not a guaranteed future outcome.
Option D. Implied volatility, based on that model and its other inputs — Correct answer
Answer: D. Implied volatility is inferred by matching an option price under a specified model. The observed option premium is the target and volatility is the unknown parameter adjusted to match it. The result depends on the model and the remaining inputs. It is not a promise that future realised price fluctuations will match the estimate. Remember: Implied volatility is price-implied and model-dependent, not a certainty about future volatility.
Hint, shown before you answer in practice mode: Common mistake: Treating implied volatility as a guaranteed forecast.
XVI-094mediumconceptual
Q3A trader buys a ₹900-strike put for ₹32 and sells a ₹850-strike put for ₹14 on the same underlying and expiry. At expiry the underlying futures is ₹870. What is the net result per unit? Ignore costs and immediately close any resulting futures.
Option A. ₹12 profit — Correct answer
Option B. ₹18 loss
Why it is wrong: It reports the maximum premium loss as though both puts expired without value.
Option C. ₹32 profit
Why it is wrong: It reports the maximum profit of ₹50 − ₹18, although the settlement is above the lower strike.
Option D. ₹30 profit
Why it is wrong: It ignores the premium cost.
Answer: A. A put debit spread has a net premium cost and different payoff regions on either side of its two strikes. Net premium cost = ₹32 − ₹14 = ₹18. At ₹870, the purchased put pays ₹900 − ₹870 = ₹30. The sold ₹850 put is out of the money. Net profit = ₹30 − ₹18 = ₹12 per unit. Remember: Find each leg’s payoff at the stated settlement before applying a spread’s maximum-profit formula.
Hint, shown before you answer in practice mode: Common mistake: Using the strike width at a settlement that lies between the strikes.
XVI-111mediumnumerical
Q4In a simplified risk illustration, two positions have P&L in ₹thousand as follows: scenario 1 is −20 and +15, scenario 2 is −10 and −12, and scenario 3 is +15 and −10. The risk amount is the worst combined loss among these three scenarios. What is it?
Option A. ₹32,000
Why it is wrong: It adds position 1’s worst loss of ₹20 thousand to position 2’s worst loss of ₹12 thousand from a different scenario.
Option B. ₹5,000
Why it is wrong: It uses the first scenario’s loss rather than comparing all three.
Option C. ₹20,000
Why it is wrong: It reports only the largest loss on one position.
Option D. ₹22,000 — Correct answer
Answer: D. Portfolio scenario risk adds position results within each common scenario before selecting the worst portfolio loss. Scenario 1 total = −20 + 15 = −₹5 thousand. Scenario 2 total = −10 − 12 = −₹22 thousand. Scenario 3 total = 15 − 10 = +₹5 thousand. The worst combined loss is ₹22 thousand. Combining different positions’ worst outcomes from different scenarios would answer a different question. Remember: Aggregate within each common scenario before choosing the worst result.
Hint, shown before you answer in practice mode: Common mistake: Adding each leg’s independently worst loss as though those states necessarily occur together.
XVI-130hardnumerical
Q5Under the category percentages in SEBI’s 9 September 2026 circular, a commodity is already classified as sensitive and its applicable annual deliverable supply is 20 lakh MT. What is the percentage-based client limit before any further contract-specific application? The result is already a round quantity.
Option A. 20,000 MT
Why it is wrong: It applies the 1% narrow-category percentage.
Option B. 40,000 MT
Why it is wrong: It applies the 2% broad-category percentage.
Option C. 1,00,000 MT
Why it is wrong: It applies 5% rather than 0.5%, a tenfold conversion error.
Option D. 10,000 MT — Correct answer
Answer: D. The category percentage must be applied to the relevant deliverable supply with careful conversion from percent. Sensitive-category percentage = 0.5% = 0.005. 20 lakh MT = 20,00,000 MT. Percentage-based quantity = 20,00,000 × 0.005 = 10,000 MT. This question does not grant a position irrespective of other applicable limits. Remember: Confirm the category, supply basis and percentage conversion before applying other limits.
Hint, shown before you answer in practice mode: Common mistake: Using the broad-category number for every agricultural commodity.
XVI-144mediumnumerical
NISM Series XVI practice: common questions
Are these the real NISM Series XVI exam questions?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
How many practice questions are there for NISM Series XVI?
150 at the moment, across 10 practice topics, with one page per unit. It is a practice set, not a copy of the paper: the real NISM-Series-XVI: Commodity Derivatives Certification Examination has 100 questions.
Where are all the questions and answers?
On the 10 practice topics listed above. There are 5 in full. Each unit's page has the rest, with all four options, the correct answer and why each other option is wrong.
Does negative marking apply to NISM Series XVI?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. Timed practice here uses the same rule.
How do I book the NISM Series XVI exam?
You register and pay on NISM's own website, nism.ac.in. The steps and the fee change from time to time, so read them there on the day you book.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
See the exam these questions follow
The Commodity Derivatives exam page shows the question count, the time, the pass mark and the marking rule.
Open the NISM Series XVI exam page