Credit Derivatives (CDX, CDS, CDX Options) Trading?
Thoughts on this space? I find it pretty fascinating but interested to hear how much opportunity exists. Feels like a skillset that would be particularly niche, especially if you're working with CDX. With CDS feel that you may be entering into Distressed Credit territory which is often touted as a nice place to be.
Additionally, how "vanilla" is CDX considered? Aware there are huge volumes associated with it but feels slightly more complicated than, say, vanilla rates trading. Trying to position myself in a space that has long-term viability.
Analyst 1 in S&T - Other, way too quiet in here. What about these resources:
More suggestions...
I hope those threads give you a bit more insight.
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Depending on what you trade within macro credit, it varies in liquidity, this includes cdx, credit etfs, Iboxx TRS, cdx & etf options, and tranches/correlation trading. it's an interesting and technical desk that intersects with the growth of credit ETFs and portfolio trading. The desk is fairly propy and imo is one of the best ficc desks to join.
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I think credit is a fairly good seat to be in. But more so than that, I think it's important to find a seat where you will be developed and supported by the senior traders and where you have a good growth trajectory. I'd focus more of finding good mentors/champions of your career rather than have tunnel vision on one product.
This is dead on. Often times HY traders & salesguys will move to new jobs together so finding a mentor who will look out for you is the most important thing. If you can do this and get onto the desk you want, you are even luckier. Most of the guys I know have moved around a lot in their careers, often for large pay bumps so having a strong network is equally important, your reputation is everything. Off the top of my head I can think of 4 or 5 major brokers where their big time traders have moved to new companies together 3 or 4 times after enjoying working together.
Do you guys know any resources to learn more about credit derivatives/HY trading? Interested in a role that trades HY/credit derivates. Have experience in sales but way more interested in a trading seat for this product, but need to strengthen my knowledge in this area no doubt
It’s a really interesting and complex space – I work on a HY Desk where we trade macro products as well and consistently watch the relationship between CDXHY and HYG. Both can be used as hedges for cash and we are constantly unwinding and putting up new positions. We will primarily buy protection (sell the index) when we are risk off and sell protection (buy the index) when we are risk on. These positions can vary in size from $1mm in one account to $200mm+ over multiple accounts. We communicate with our strategists and PM’s on what we think CDX is going to do and then put these positions up so there is usually at least a brief conversation where you can get a lot of info from them on their market expectations.
Each broker that we work with will typically have 1-2 CDX traders, it is a very specialized area of trading and these guys are usually extremely smart. HY traders & sales guys are usually more laid back.
Thanks for the color on this. This area seems really fascinating and definitely interests me much more than other credit products that have much more volume. Been doing a tons of reading on HY, CDS, credit derivatives just in general. Unfortunately, reading can only get you so far vs actual experience being on a desk. Have experience in sales, covering more liquid products, like IG and rates, but definitely want to learn more and shift focus to work more in the HY/LL space in a trading or sales capacity.
If you're open to it, would you be cool with me messaging you to learn some more?
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