Prop Trading: Equities vs. Derivatives

As far as the pay structure goes, very useful information can be found on a thread that took places a few weeks ago:
http://www.wallstreetoasis.com/forums/how-are-traders-paid

Why would you ever want to go from a prop shop to a bb? Your upside is not less at a prop shop but you will have more beuroacy bullshit to deal with at a bb

"Oh - the ladies ever tell you that you look like a fucking optical illusion?"

Would any of the current prop traders on this forum be willing to chime in?

"Derivatives" is not an asset class, so you can't compare equities vs. derivatives. Are you trying to get a comparison between trading equities and trading equity derivatives?

Stability, if you're not the best trader out there. Although S&T at most BB's is fairly meritocratic anyways so I guess it's somewhat of an issue across the board...

I agree though, if I could get into a FNY/Trillium/etc and pick it up easily there would be no way I would go to the sell side.

I'm trying to get a comparison between equities trading prop firms such as trillium and fnys, and options trading prop firms such as wolverine, DRW, and susquehanna.

i def wouldn't want to start my trading career at drw and thats coming from personal 2nd round interviewing experience for a summer internship over a year ago.

their game room is legit, fridges full of free quality drinks like vitamin water and snapple, and lunch is catered every day...decent perks

BUT, their base salary out of college is below that of an ibank, i don't know the details of their signing or year end bonuses but im sure they are less as well.

oh and one of the partners, the blonde dude, is a douche IMO, but maybe im jaded cause he interviewed me and i didn't get the job (which, looking back, was incredibly lucky for me)

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"its the running joke now, we now have fair trade with china so they send us poisoned sea food and we send them fraudulent securities."

I completely agree with Korey above, let me caveat all this first by saying that I am now a 3rd year in fixed income in a non trading role, I was not promoted to associate but not asked to leave so im not a complete a**hole. Id love to trade and am thinking of my next move and am willing to take base salary cuts to enjoy my job more be it if its trading equities, fx, whatever. This is what i've made, 60k first year plus a bonus of 70k, my base rose to 70k for my 2nd year which just finished and i got a bonus of 50k and my base was just raised to 80k. Its the summer, im still thinking, maybe im too comfortable in the nest egg of my role and want to take all my vacation days before really pursueing something, who knows, but from what ive gathered, the play-the-role bureacry crap at a bb really is really non-existent at the prop shops which is great. Im sure theres no dress code, not too much shaking of hands, frail elevator talk, etc. Plus im sure the hours are better. Im in 630 to 630 now, I want to be in 8-5...

I'm sorry, but this is just annoying the crap out of me. Caveat is a NOUN. Please do no use it like a verb, it sounds absurd......

haha sweet picture.... looks like my one of my screens!

"Oh - the ladies ever tell you that you look like a fucking optical illusion?"

So getting into a respectable prop shop like first ny, trillium, susquehanna, etc is harder than a s&t BB?

Assuming they give you optiver (spelling?) tests and other mathematic evaluations, what else do these prop shops look for? Do recent college grads even have a shot at these or is experience needed?

also, most "good" ones don't require contribution of capital like that fraud LYNX TRADING right?

sry double post

Will you silly WSO'ers stop thinking the world revolves around math. The market cannot be solved by knowing equations and models. If this were the case mathematicians would be the richest people in the world. This clearly is not the case. There are plenty of people who do not even like math that have been very sucessful traders.

More to come....

"Oh - the ladies ever tell you that you look like a fucking optical illusion?"

DRW's base is most definitely NOT less than any BB S&T . In fact its 20K higher than the usual.

oh really, well unless the base pay at an ibank is 75-80 out of college (and its not, in case you didn't know) you're completely wrong.

besides having 2nd round interviews personally with them, a friend of mine actually did get an offer and it was in the 50's and that was just a year ago, and based on this whole housing/credit crunch/recession-ish thing, dunno if youve heard of it, they def havent increased their base

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"its the running joke now, we now have fair trade with china so they send us poisoned sea food and we send them fraudulent securities."

I think you added $20k instead of subtracting it in your reference to BB pay. Otherwise, your first paragraph just doesn't make sense.

ya ur right

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"its the running joke now, we now have fair trade with china so they send us poisoned sea food and we send them fraudulent securities."

It is true, that a 1st year's base pay at a top tier prop shop is lower than a 1st year's base pay at a BB. However, it is only the BASE pay that is lower. All in, a 1st year at a top prop shop 'should' take in more than a 1st year at a BB, because bonuses are usually significantly higher. I say should because well, it's a performance based position and if you don't get the job done you won't get your bonus.

To sum things up. A career at a prop shop is a little bit more risky in that you don't get a satisfying large base pay, but I'd say you have a better shot at earning more in the early years after college. It's all about risk/reward and how much you are willing to take......

I have offer letters right in front of me from S&T in a top tier BB (not mine) and from DRW (mine). Unless they're really screwing him, Im pretty sure of my numbers.

I'm not allowed to discuss my compensation in public - but whats your idea of 1st year BASE pay in say Goldman Sachs (60K , 70K, 80K?) And the bonus is usually - 70-80K?

Of course the whole trading game revolves around math, there is no question about it. I myself have used some of mathematical and statistical skills to forecast revenues for different firm based on their drivers and turned out to be well. One of the best hedge funds is the D.E Shaw group and David Shaw was a comp sci major so he used a lot of math.

there are complicated mathematical formulas behind the fixed income market which is way bigger than the equities market.

I see both sides, and for the record I'm into the mathematical side of finance myself. That said, I think Trade4Size has a valid point in that the equations and models are not the be all, end all, if for no other reason than by virtue of the subjectivity involved in using pricing models, for example. It would seem if it was as simple (teasing) as figuring out and utilizing a few PDE's and martingales, and models were accurate, securities would barely move because everyone would be using the same ones with the same inputs. Maybe I'm wrong about that, but I think thats where intuition and subjectivity (and luck) fill in the gaps.