There should be a line on the bow square that would meet the bottom edge of the bow square if it were extended (the edge that touches the rest). That is the line you want to measure from, and is usually the bottom line.
For shooting 3 under, you want a nock above the arrow, and many of us also put a nock under the arrow. But the bottom of the nock above the arrow is what you're measuring to.
I have 8 bows that I have tuned to shoot 3 under, and the nock points on all of them are in the range of 5/8 - 3/4, so for me, 7/8 would be a little high. It's not going to hurt anything to shoot with a nock point that is a little high (better than a nock point that is too low), but 7/8 may be a little higher than you need.
I find out where to put my nock point by shooting a bare shaft, and put the nock point where I get level, or slightly nock high, arrow flight.