Hi - I am an Equity Swaps Trader at one of the biggest investment banks on the street however I am super bored with my role and would like to hear from like-minded people who may be in a similar situation. I would also like to hear readers views on Delta One Trading and also any advice.
I am more than happy to answer any questions as well...about the industry that is...and the product
I am a 2nd year analyst on track to becoming assosciate this year - if i stick with the bank that is, the reason I am so bored with this product is because of its super linear symmetric nature. All you do is sit and hedge all your contracts - its all hedging hedging hedging , to top it all I trade single stock equity swaps so its not like i am using my brain for even one second our hedge is the actual equity underlyer.
Well where do you see yourself going from here? Are you able to switch to another desk within the bank? I'm in fixed income and there's definitely more opportunity for creativity, more complex products, etc. from what I hear, but I've always been in fixed income. Have you worked on the delta one desk since you started?
Also, I'm interested in the work you do and why you're bored with it. At my bank they have us analysts do a year in FI then a year in equities, so this summer I'll be making the switch to equities, and have no idea what I want to do. What's the typical path on a delta one desk - do they have you trading, or do you just keep P&L and help hedge risk? As I understand it delta one is essentially flow trading, right? Since it is more "plain", I'd imagine that income potential is less but there's maybe more job stability - is this correct? After watching so many FI guys get the ax with recent market conditions, I'm actually looking for a desk/product that is more "stable" - I don't mind giving up the potential for millions in return for a higher probability of "moderate" success. Also feel free to ask me any questions you have about FI...
I assume your on a flow desk, do you think it would be more fun if you were on a prop desk? You said your a 2nd year analyst how long have you been trading, and is it your own book or shared? This forum is mostly undergrads and only a few people that are actually traders/sales so keep that in mind. I have no idea on the margins on equity swaps, is it pretty volume intensive or are spreads still pretty wide since i assume customers want very very large quantities.
It's interesting to see you're bored on a more flow desk. I'm going into this summer and trying to think of desks I am interested in now. I'm actually thinking that working in a more flow product like delta one might be less boring because it's pretty faced paced. I think if I work as a structurer on an exotic fixed income desk (i'm pretty mathematically inclined), I'd be bored because it seems slow paced and not as exciting as managing a trading book every 4 seconds as the market moves.
But then again, people say equities are dying and FI is where it's at...
yeah tell me about it equities are really dying, have you seen the volatility post on the S&P and its # of 1% 2% day moves? Really boring let me tell you, i bet the equity traders are reading shakespeare on the desk they are so bored. I love how all these exotic FI groups that were supposed to be the next hot thing that are doing nothing but churning out loses, while equities continue to do record volume. You people are all clones of LTCM, read way too many books IMHO. Anyway back to boring equities.
wo man, relax. i'm just saying i have heard (crude) generalizations that equity trading is becoming more computerized. if you read my post, i actually say i think it would be more interesting (and that the new hot exotic stuff sounds boring).
Without a doubt the volatility of the market is making 2008 a record year in Equities volumes, which directly translates to higher profits. The real question is what does this mean for a cash/spot/delta-one trader. A delta-one flow desk will try to generate P/L by whatever recurring low-risk method that it can, like commissions, financing spreads, etc. For a trader on such a desk there is less and less "brain work" involved because few concentrated prop bets are taken and little analysis is required. Volatile markets contribute to higher market volumes and commission, but they do little to enhance the contribution of a flow trader because majority of the P/L comes from comm, and that is still attributed to a salesperson.
I completely understand someone being bored in a delta-one job because it's relatively risk averse, the "hard stuff" of yesteryears is automated, there is extremely little variety from day to day, and majority of junior-level work is pure drudgery.
Edit: Double Post
Here are my 75 cents, i have posted in the past so you guys can check for my previous entries, but im an underachieving 2nd year in fx strategy, its highly academic and boring, its reading intensive and then producing literature interspersed with mathmatical facts or the other way around, arbitraty choice, in fact i have had senior people here tell me my contributions have been good at times, it could all be a lie to placate but im not too interested in the truth, i wont be promoted to associate bc of some of my shoddy work habits but I also didnt think I'd be let go until recently given the occurances on Wall Street, also incoming 1st years at 60k are a cheaper than 3rd years for 75k base, no its not a lot, but banks love saving money, i can hear that annoying Amy Winehouse song in the background of my mind for some reason, people have told me to use headhunters in the past, but really, have you looked around the landscape? Dont all the layoffs remind you of cattle slaughterhouse? Honestly, My favorite activiies are checking my personal stocks and taking breaks to walk around outside just taking it all in...
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having summered in ibd and now s&T full time i dont see how anyone could ever argue that ibd is more interesting or exciting.
Can't you just go Jerome Kervel one them? Life will sure be pretty exciting.
I noticed one of the above posters said swaps was fairly basic. Do people who know what they are talking about think this will limit upside/ growth potential/comp? I would be curious to hear.
no..delta one trading can be a small part of a much bigger picture, ie structuring Equity Derivatives...hence your upside is not always capped if youre part of somthing. swaps are a way of bypassing the utilisation of pure equity products in order to take advantage of some loopholes, usually associated with structuring..not always though
Eum molestiae sint accusantium cupiditate. Reiciendis quia odio repudiandae voluptatum nemo.
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