CISI Investment Advice Diploma

CISI Derivatives Level 4 (IAD)

Official CISI Accredited Training Partner

Prepare for the Investment Advice Diploma Derivatives unit with ten syllabus chapters, worked calculations, revision cards and five full practice papers.

400 Practice Questions Detailed Study Notes Realistic Mock Exams

Course syllabus information reviewed for 2026.

Exactly what is included

400 practice questions across 5 mock exams · unlimited retakes
Focus Learn · key areas, pitfalls, exam traps & key numbers
Flashcards · fun, fast and effective recall
Derivative formulas, worked examples and chapter references
AI Analyzer & Mentor · pinpoints your weak areas
Study Mode Exams · learn while you train
AI Chat trained specifically for this exam
Study material organised by syllabus

Prepare for CISI Derivatives Level 4

Derivatives is a technical-unit option in the CISI Investment Advice Diploma. It is a separate Level 4 unit from the Level 3 Derivatives course used in other CISI routes. Choose the course that matches your registered examination.

Study the underlying markets, exchange-traded and OTC contracts, clearing and settlement, portfolio analysis, hedging strategies and client regulation. The official assessment contains 80 scored multiple-choice questions in two hours. Its largest base allocations are 14 questions each for exchange-traded products, OTC derivatives and trading, hedging and investment strategies.

The learning hub contains ten detailed chapters, 154 recall and calculation cards, and 161 searchable references including 58 worked examples. Five timed mock exams provide 400 practice questions. The first four papers contain distinct questions, and the fifth mixes twenty from each. Each worked method shows its inputs, steps, answer and common trap. Practice uses a clearly identified 70% mastery target; confirm the official pass requirements when booking.

Key Benefits

Separate Level 4 course

Follow the Investment Advice Diploma unit with its own syllabus and learning materials.

✓ IAD technical-unit option
✓ Distinct from Level 3
✓ Ten chapters

Worked calculations

Practise pricing, margin, hedge sizing and option strategies with complete methods.

✓ Defined inputs and units
✓ Ordered calculation steps
✓ Answers and common traps

Five weighted papers

Build from foundational knowledge to applied and final practice using the official base allocation.

✓ 80 questions per paper
✓ Four original papers
✓ One balanced mixed paper

Syllabus

Module 1: Introduction to Derivatives 5% syllabus weight

Forward commitments and option rights; Gearing, liquidity and risk; Market participants.

• Forward commitments and option rights
• Gearing, liquidity and risk
• Market participants

Module 2: Underlying Assets 12.5% syllabus weight

Money markets, bonds and currencies; Equities and tracker products; Commodity and other underlyings.

• Money markets, bonds and currencies
• Equities and tracker products
• Commodity and other underlyings

Module 3: Exchange-Traded Futures and Options 17.5% syllabus weight

Trading venues and order instructions; Futures carry and option valuation; Greeks and market reporting.

• Trading venues and order instructions
• Futures carry and option valuation
• Greeks and market reporting

Module 4: OTC Derivatives 17.5% syllabus weight

Forwards, FRAs and swaps; Credit derivatives and structured products; Documentation, collateral and controls.

• Forwards, FRAs and swaps
• Credit derivatives and structured products
• Documentation, collateral and controls

Module 5: Clearing 8.75% syllabus weight

Novation and clearing relationships; Default resources and account protection; Initial and variation margin.

• Novation and clearing relationships
• Default resources and account protection
• Initial and variation margin

Module 6: Delivery and Settlement 6.25% syllabus weight

Close-out, rollover and delivery; Option exercise and assignment; Invoices and uncleared margin.

• Close-out, rollover and delivery
• Option exercise and assignment
• Invoices and uncleared margin

Module 7: Portfolio Research and Construction 6.25% syllabus weight

Research and market information; Portfolio risks and construction; Performance and risk measures.

• Research and market information
• Portfolio risks and construction
• Performance and risk measures

Module 8: Trading, Hedging and Investment Strategies 17.5% syllabus weight

Futures and option hedges; Spreads, combinations and synthetics; Funds and client applications.

• Futures and option hedges
• Spreads, combinations and synthetics
• Funds and client applications

Module 9: Investment Selection and Administration 5% syllabus weight

Client objectives and capacity; Suitable strategy selection; Monitoring and portfolio review.

• Client objectives and capacity
• Suitable strategy selection
• Monitoring and portfolio review

Module 10: Regulatory Requirements 3.75% syllabus weight

Jurisdiction and client protection; European clearing and reporting; US securities and futures regulation.

• Jurisdiction and client protection
• European clearing and reporting
• US securities and futures regulation

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Omar T.

· Aug 4, 2026

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Passed on my first attempt

The material covers the core topics exceptionally well. It's much easier to digest than the dry official workbook. Used it daily on my commute and passed my exam.

Tariq A.

· Feb 14, 2026

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Updated for 2026!

I used the new 2026 study material. It has the latest rules for Saudi Arabia. Passed with 88%!

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· May 22, 2026

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· Jul 31, 2026

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Hannah W.

· Sep 12, 2024

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Passed first time!

I passed my exam on the first try after switching to this course. The mock exams and the AI explanations for tricky topics are excellent.

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· Jul 30, 2026

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Exactly what I needed

I was struggling with some of the more confusing concepts, but the mock exams and flashcards here broke it down perfectly. The explanations really clarify why an answer is wrong.

Frequently Asked Questions

No. This is the Level 4 Derivatives technical unit in the Investment Advice Diploma, with ten chapters and an 80-question assessment. The Level 3 course remains separate.

The official syllabus specifies 80 scored multiple-choice questions in two hours. Computer-based sittings may add unscored trial questions with proportionate extra time.

Practice uses 56 correct answers out of 80, inferred from comparable IAD units. An accessible official unit-specific pass-mark record was not recovered, so this is labelled a practice target. Confirm official requirements with CISI when booking.

Exchange-Traded Futures and Options, OTC Derivatives, and Trading, Hedging and Investment Strategies each carry a base allocation of 14 out of 80 questions. Official allocations may vary by up to two per element.

Ten chapters, 154 recall and calculation cards, 161 revision references including 58 worked calculations, an AI tutor and 400 practice questions across five mock exams. Chapter audio is not included.

This is a technical-unit option. The IAD route also requires UK Regulation and Professional Integrity and Investment, Risk and Taxation, subject to CISI’s qualification requirements.

Yes! Test your knowledge and review detailed explanations with the free CISI Derivatives Level 4 (IAD) Mock Exam Preview below. It contains 15 exam-style questions from one named syllabus topic; the full course provides complete mock exams and syllabus coverage.

Interactive preview

Free CISI Derivatives Level 4 (IAD) Practice Questions & Exam Preview

Try 15 CISI Derivatives Level 4 (IAD) practice questions from Exchange-Traded Futures and Options

Practice CISI Derivatives Level 4 (IAD) exam questions with answers and explanations. The full course includes 5 mock exams and complete syllabus coverage.

Exam Preview

Exchange-Traded Futures and Options

Question 1 of 15

Which activity primarily belongs to a clearing organisation rather than an execution venue?

1 / 15

Flashcards

Card 1 of 10Chapter 1

Question

What distinguishes a forward commitment from an option?

Tap to reveal answer

Focus Learn

Key Examinable Areas7

1.1.1: Forward commitments
1.1.2: Gearing and margin
1.1.3: Purpose and risk
1.1.4: Volume, open interest and liquidity
1.1.5: Exchange and OTC comparison
1.1.6: Option rights and payoffs
1.1.7: Market participants

Common Pitfalls to Avoid3

Exam Traps3

Key Numbers2

Chapter 1: Introduction to Derivatives

A derivative transfers a defined exposure through a contract. Begin with who has a right, who has an obligation and how the payoff changes before comparing the amount paid or deposited.

1.1.1: Forward commitments

A forward binds both parties to buy or sell an agreed underlying quantity at an agreed future date and price. A holder's option instead gives a right, while its writer accepts the corresponding obligation. Most forwards are negotiated OTC; do not define every forward as necessarily off-exchange. Bespoke amounts and dates can improve hedge fit but complicate transfer or early termination. Physical delivery and cash settlement describe how obligations are fulfilled, independently of whether the position is long or short.

1.1.2: Gearing and margin

Derivative exposure is mea…

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Practice modes

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Learn with feedback, then switch to exam conditions.

Study Mode

Instant feedback & explanations

See the answer and explanation after each choice.

Exam Mode

Realistic exam simulation

Use the timer, keep answers hidden, then review your result.

Who Is This For?

✓ Candidates taking the Derivatives technical unit in the Investment Advice Diploma

✓ Investment advisers and portfolio professionals studying derivative suitability

✓ Learners preparing for Level 4 derivative pricing, hedging and client applications

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