Ten of the 64 learning outcomes on the Derivatives Exam syllabus carry an explicit flag in CIRO's own wording: questions on them "may include calculations". Three more name calculation in the outcome text without the flag.
Thirteen out of sixty-four. That sounds open-ended until you look at what they ask for, which reduces to six arithmetic types. The list is closed, and you can know every one of them before you book.
Where they live:
| Flagged | Also name calculation | Questions | |
|---|---|---|---|
| Element 3 — Types & features | 2 | 1 | 22 |
| Element 4 — Pricing | 2 | 1 | 22 |
| Element 5 — Trading & clearing | 0 | 1 | 20 |
| Element 6 — Strategies | 6 | 0 | 26 |
All thirteen sit inside Elements 3 to 6 — the same four elements that carry 90 of the exam's 120 questions. There is no arithmetic anywhere in the conduct quarter.
What you get to do it with: an on-screen Basic or Scientific calculator. Personal calculators are not permitted, and the provided one has no time-value-of-money keys.
1. Fair value of a future or forward
Outcome 4.2. The price a contract should trade at, given the spot price and the cost of carrying the underlying to expiry. Everything else in this family follows from it: the basis against the cash market, whether a quoted contract is rich or cheap, and whether an arbitrage clears after costs.
Two things the exam leans on. First, carry scales with time, so a longer-dated contract carries the larger premium and both premiums shrink toward zero as expiry approaches. Second, a rate is annual unless the question says otherwise — a 90-day term needs the rate pro-rated, and leaving it annual is one of the most reliably offered wrong answers on the paper.
The distractors in this family have a shape worth knowing. A two-legged arbitrage offers you each leg on its own as a wrong answer: the futures leg alone, the cash leg alone, and then the right sum applied to the wrong contract size. Every one of them is a number you will have produced on the way to the answer, which is exactly why checking your working against the options is not a check.
2. Intrinsic and time value
Outcome 4.6. Given the underlying price, the strike and the premium, split the premium into intrinsic value and time value.
The arithmetic is a subtraction. What makes it a question is the floor at zero and the direction of the comparison. A call's intrinsic value is the underlying minus the strike or zero, whichever is larger. A put's is the strike minus the underlying, or zero. One market price against one strike can satisfy only one of those two tests, which is why a call and a put at the same strike can never both be in the money.
Time value is then whatever is left of the premium. An option with no intrinsic value is all time value; one at expiry has none.
An index option chain quotes the index at 1,012.60, with strikes at 1,000, 1,010, 1,020 and 1,030. Which of the following correctly lists every series that is exercisable today, with its intrinsic value?
3. Put-call parity
Outcome 4.8. The relationship between a call, a put at the same strike and expiry, the underlying, and the present value of the strike. The exam uses it as a calculation — produce a fair value, or price the package that locks a profit when the relationship is violated.
Two places candidates lose it. The present value of the strike has to be discounted over the contract's own term, on the day-count the question gives, with no TVM keys to do it for you. And the direction of the violation decides which legs you are long and which you are short — getting the arithmetic right and the package backwards is a fully-formed wrong answer that will be sitting there waiting for you.
4. Margin
Outcome 5.15, with outcome 2.4 approaching the same material from the rules side. Margin across strategies and account types, including the cases where coverage reduces the requirement.
The pattern worth drilling is proportional, not subtractive. In a hedge account, coverage cuts the call by the uncovered fraction: short 40,000 bushels against a $6,000 requirement with warehouse receipts covering 18,000 leaves 22,000 uncovered, so the fraction is 22,000 ÷ 40,000 = 0.55 and the call is $3,300. The offered wrong answers apply the covered fraction instead (0.45, giving $2,700), or subtract a dollar value of cover, or ignore the receipts entirely and charge the full $6,000.
Offsets are the other half. One position reduces the margin on another only when the two genuinely correspond — same underlying, same expiry, same exercise style. A long European option does not offset a short American option even when everything else matches.
5. Hedge ratios
Outcomes 6.3 and 6.7 — how many contracts it takes to hedge a stated exposure, including delta hedging on the options side.
This is the type with the most moving parts and therefore the most distractors. A full equity-index hedge needs the portfolio value, the beta against the index, the degree of hedge the manager actually wants, the index level and the contract multiplier — and dropping any one of them produces a clean, plausible number.
A C$14,000,000 equity portfolio has a beta of 0.85 against the S&P/TSX 60. The manager expects a temporary correction and hedges only 40% of the exposure, using SXF futures at 992.00 (multiplier C$200 per index point). How many contracts, and on which side?
Look at what separates A, B and D: one input each. A skips the hedge fraction, B skips the beta, D uses both. All three are arithmetically clean. The question is not testing whether you can divide — it is testing whether you assembled the right numerator.
And C is the one that catches people who did everything right. The sign is its own decision, made after the count, and a long cash position is hedged by selling.
Delta hedging is the same discipline in option form: exposure is contracts × delta × contract size, delta moves as the underlying moves, and a position that was neutral this morning is not neutral now. Re-derive the exposure, compare it to the hedge you hold, and the difference is the trade.
6. Profit and loss on a position
Outcomes 6.2, 6.4, 6.6 and 6.8 — the profit or loss on a speculative, hedging or arbitrage position, in futures and in options.
The arithmetic is addition and subtraction. The work is remembering everything that belongs in the sum: the premium collected or paid, the settlement owed, the round-trip spread, the multiplier, the number of contracts, and the sign. A short put that finishes in the money collects its premium and owes the settlement, and the net can be a loss even though money came in at the start.
For hedges there is one more term, and it is the one the exam most wants you to carry: basis. A hedge locks the price only to the extent the cash-to-futures gap at close-out matches the gap at inception. If the basis moves twelve cents against a producer, the realised price lands twelve cents short of the inception futures price — even with the futures price completely unchanged. The textbook perfect hedge is the distractor.
How to Drill Them Without Wasting Weeks
Use the calculator you will actually be given. Not the financial calculator on your desk. Your operating system's basic calculator is a closer match to what the room provides, and the habits you build on a TVM stack will not transfer.
Do each type until it is boring, then add a clock. Six types is a weekend of work spread over two weeks. Each one takes under a minute when the relationship is automatic and four minutes while you are reconstructing it — and at 90 seconds a question, four minutes is two other questions you never read.
Read the whole option set before committing. The distractors are built from your own intermediate numbers. Recognising a figure you produced is evidence you are in the right family of errors, not evidence you are right.
Write the sign down separately. Count first, direction second, and say the direction out loud: the portfolio is long, so the hedge is short. More calculation marks are lost to an inverted sign than to bad arithmetic.
Where to Practise, Free and Paid
Our free Derivatives readiness check is 25 questions weighted like the real blueprint, element by element, in about fifteen minutes with no signup — enough to tell you whether pricing or strategies is the one costing you marks.
For the volume: EnCiro's Derivatives prep holds 10,000+ scenario-based questions, every option carrying its own explanation — including the three wrong ones, which on a calculation question is where the learning is. Custom mocks can be pointed at a single element, so twenty pricing papers in a row is a thing you can actually sit. Both questions on this page are ours.
The rest of the plan, week by week, is in How to Pass the Derivatives Exam.
FAQ
Are there calculations on the CIRO Derivatives Exam?
Yes. Ten of the syllabus's 64 learning outcomes carry CIRO's explicit 'may include calculations' flag — two in Element 3, two in Element 4 and six in Element 6 — and three more name calculations in the outcome text itself. All thirteen sit inside Elements 3 to 6, which carry 90 of the exam's 120 questions between them.
What calculations do I need for the Derivatives Exam?
Six recurring types: fair-value pricing of a future or forward, intrinsic and time value, put-call parity, margin, hedge ratios, and the profit or loss on a speculative, hedging or arbitrage position. The list is closed — it comes straight off the thirteen learning outcomes that involve calculation.
Can I use a financial calculator on the Derivatives Exam?
No. Personal calculators are not permitted. The exam provides an on-screen Basic or Scientific calculator with no time-value-of-money keys, so every present-value step is done by hand. Practise on the same kind of tool or the first margin question will cost you minutes you do not have.
How much of the Derivatives Exam is arithmetic?
CIRO does not publish a count of numeric questions. What it publishes is that ten outcomes carry an explicit calculations flag, three more name calculation in their own text, and all thirteen sit in the four elements carrying 90 of 120 questions — with Element 6 alone holding six of the flagged ten. Budget as though a meaningful minority of the paper is numeric, and remember that a calculation question is all-or-nothing in a way a conduct question is not.
What is the most common mistake on Derivatives Exam calculations?
Stopping at an intermediate number. The distractors are built from the specific slips candidates make — a dropped multiplier, an annual rate left un-prorated across a 90-day term, a hedge fraction or a beta skipped, a sign inverted — so several wrong options will contain a figure you produced on the way to the answer. Finding a familiar number is not the same as finding the answer.
How many questions per minute on the Derivatives Exam?
120 questions in 180 minutes, so 90 seconds each on average. Calculation questions run over that and conduct questions run under it, which is fine. The danger is the one you can almost do: three minutes rescuing a single margin call is two other questions you never read.
Sources
- CIRO — Derivatives Exam — the official syllabus, which flags each learning outcome that may include calculations, plus the study guide and practice exam
- CIRO — Proficiency for New Candidates — exam format, enrolment and attempts
