Equity Derivatives BB Interview: behavioral and technical questions to expect?

Hi,

I got a interview with a BB for Equity derivatives trading position.

What kinds of questions should I expect in terms of behaviors and technical questions?

Thank you.

 

complete nonsense. I interviewed for a GS equity derivs analyst position once actually, a very long time ago. You will not be asked to derive anything. You will not be quizzed on Feynman-Kac. You will not even be asked much about implied vol. GS was, and probably still is, very fit based. They may ask if you know the inputs to black scholes. Or can talk about where gamma is the highest in the life of an option. Be prepared to talk about your background and why you are interested in the desk and the career of trading.

 

I got fascinated with equity derivs years ago. The ability to not only hedge against risk using them and/or be able to use them for speculative reasons i.e. buy/sell them with a relatively small amount of capital. However, the returns using them can be exponential.

I also like them because you can bet on events such as use straddles if an event is pending like the results of a lawsuit, earnings release etc. You can control 100 shares of stock with one put/call without investing but a relatively small amount in the premium of the option.

Don't want to sound redundant, but Barron's is a must-read before interviewing in equities or something dealing with equity markets. Skim Bloomberg articles. Have a good macro view as well.

I would research the company. Know why that company in addition to why eq. derivs. Also, demonstrate a love for the equity markets in general. For me, my interest was peaked when I started following the stock market back in high school. I bought my first stock then. Tell your story.

 
Best Response

So many ways to go with this.

  1. I get bored with fixed income, so naturally, I preferred equity derivatives to fixed income derivatives.
  2. The non-linear layoffs are appealing to me. I love managing the risk of the greeks.
  3. As long as my client has a view on any stock or index, I will have something to sell them. It doesn't matter if they're bullish, bearish, or neutral.
  4. I posted the below as a response to "tell me about yourself". You can use that framework, even if the specifics are different for you.
SirTradesaLot:
Interviewer: "Tell me a little about yourself."

Me: "In college, I majored in Economics, the 'science' of making choices in a constrained environment to help me figure out what motivates people. I minored in Philosophy to hone my art of bullshitting. Combining these two fields with my natural proclivities has allowed me to separate very large sums of money from untold quantities of people in my 14 year career on Wall Street. Knowing the ins and outs of several large product areas has given me the knowledge of where to best hide fees. This way, the client thinks they are getting a great deal while I am ripping their fucking face off. This has allowed me to garner repeat business from said targets giving me a recurring, high margin revenue base that is portable to your firm."

You may need to adjust based on your personal circumstances, but this works pretty well for me.

 

Remember they don't expect you to know everything. Know your greeks, just the basics. if they ask you : how do you hedge volatility (gamma)? Just explain to them you don't know exactly how to do this, but you know what gamma is, and you wouldn't mind having them guide you in how to get to the rest. Or work backwards and show them how to hedge your delta, then show them the relationship b/een your gamma and delta. In other words - ok if you don't know, just make sure you put some relevant knowledge to work.

If you don't know much, and didn't study much finance they shouldn't ask you much about options, and they will mainly be testing your intellect and how you react under pressure. Don't rush, take a deep breath and ask THEM questions every time you stumble on something.

Read the FT as you said - back to front. Read also about the company you are interviewing at and ask some random questions about stuff you have read recently in the press. Most likely they won't know themselves about what you are asking them, and will be positively surprised you are curious about the company.

You'll find most of what i wrote are generic interview advice, but at a very junior level that's as hard as it will get. Best of luck, I am familiar with your environment, and it's a great one to work in.

 

Thanks alot, that is some solid advice.

All three interviewers are traders. HR mentioned it will be a competency based interview with technicals. I come from a physics background so I'm expecting brainteasers and options. My first phone interview with the associate and VP were on options and brainteasers, so I am thinking the upcoming round will be kind of similar. I will read up and be familiar with the greeks by the interview.

 

Some of these people have no idea what they are talking about. Unless you are a MFinEng or a PHD they are not going to ask you to derive BS or know measure theory or ito or any of that. Get real. If someone asks that they are ridiculous. That all takes significant, and occasionally very specific, mathematical background. Most complicated I'd expect is understand the greeks and their relationships.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

agree with jimbo and revsly.

back in the day when i was interviewing for securities divison at GS, both the executive directors were in eq derivatives. mainly asked about my past experiences, why i want to go into this field, how i would invest money, why they should hire me, why gs, etc. the only technical question i got during superday was:

"you have a bunch of real estate investments in Florida, you wnt to buy insurance on it in case there is hurricane, how should the insurance be priced?" a.k.a how to replicate the payoff of the insurance?

the correct answer was: "buy orange juice futures, as FL is one of the largest orange growing states in US".

then i found out this exact question is in "when genius failed".

 

Laboriosam qui nihil non id est. Unde quo est veritatis vitae. Iusto eaque tempora occaecati provident nisi molestiae qui. Odit reiciendis incidunt recusandae illo qui laboriosam aliquam voluptatem. Quasi mollitia velit aut aliquam libero est.

Numquam sunt in omnis quis earum fuga. Beatae reiciendis alias eaque eum maiores ut. Suscipit nesciunt et et temporibus rerum sit.

Ipsum aut neque quia dignissimos. Aut est earum qui aperiam illum et. Ipsum quidem quasi aut sit nulla iure.

 

Quibusdam earum sit odio repellendus. Voluptatibus laboriosam sapiente at deleniti sunt. Ipsam debitis voluptatem laborum accusantium similique inventore. Deleniti blanditiis sit odit iure et est possimus. In officia maiores repudiandae commodi.

Et et est voluptatum eveniet cupiditate maiores voluptates veritatis. Amet voluptas sint amet unde quibusdam veritatis. Iste odio et consequatur sequi sit. Sint natus aliquam incidunt ut quidem voluptatibus et. Ex dolores omnis qui sunt suscipit. Itaque repellendus debitis aut fuga consectetur libero rerum.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
dosk17's picture
dosk17
98.9
7
DrApeman's picture
DrApeman
98.9
8
CompBanker's picture
CompBanker
98.9
9
kanon's picture
kanon
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”