Step 1: Approach
Use the half-angle form directly: $\cot^{-1}u=\tan^{-1}(1/u)$.
Step 2: Double angle
Let $\varphi=\cot^{-1}u$ with $u^2=\dfrac{1-x}{1+x}$. Then $y=\cos^2\varphi=\dfrac{1+\cos2\varphi}{2}$ and $\cos2\varphi=\dfrac{u^2-1}{u^2+1}$.
Step 3: Compute
\[ \frac{u^2-1}{u^2+1}=\frac{(1-x)-(1+x)}{(1-x)+(1+x)}=-x \]
So $y=\dfrac{1-x}{2}$.
Step 4: Differentiate
$y'=-\dfrac12$, option (A).
Final Answer:
The expression simplifies to (1 - x)/2, so the derivative is -1/2, option (A).
\[ \boxed{-\frac{1}{2}} \]