Delta One Trading
Hey guys,
3 questions here :
1/ To anyone who has been working in Delta One desks here or knows someone, how is the industry doing ? Heard it wasn't as flourishing as it once was. And how does the skill transfer to HF if you want to go exit there ?
2/ (Most important) Could you please list all questions you could think of would ask on an interview for the analyst level ? (from most basic to most elaborated, many thanks to anyone who takes the time to do that)
3/ If someone has never worked on a Trading desk, but other finance role (think AM/WM or even IB) how rapidly can one pick up the skillset ? What's the most important thing to be good at ? What's required from an analyst ?
Thanks a lot
Delta one desk is usually rather quantitative. I’d imagine some mental math, basic probability, and questions about black scholes
Black Scholes for delta one?
lol, no. Options don’t have a 1 delta.
They still trade portfolios of options that have linear payoffs (put call parity). Most desks in the equity derivatives space will just ask basic black scholes or greeks questions to analysts just because that is what you learn in University. Most college courses never even talk about total return swaps and other delta one products, so it would be tough to ask details on these
Questions on derivatives, mainly futures, forwards and sometimes options. Greeks as well.
At a hedge fund or prop shop you should expect statistics questions, sometimes ML, time series and basic probabilities.
No need to mention brainteasers.
Overall, the best advice is to have some general but solid knowledge of equities space and futures. Don’t bullshit and be able to understand clearly what you are talking about and the intuition between the maths.
Worked on Delta1 and yes the exit to HF is very fitting.
For preparation, know mechanics of how ETFs and indices are composed, futures (the index multiplier, know how the price you're willing to pay is based on your cost of capital which may be different from the markets, etcetera). Like others mentioned know TRS and other similar products.
What bank are you looking at if you don't mind me asking?
Can someone explain this to me, this thread is the opposite of what I was expecting. I have been told Delta 1 / Delta 1 Products (Sales) is a dead end desk that will likely be fully automated in the future.
Who do you think is going to write the code to automate this stuff? Writing code to automate this isn’t a one time thing where you write the code and the algo now captures 100% of the market mispricings. There will need to continuously be improvements to the algo and modifications based upon the dynamically evolving landscape. Plus, do you really think an algo is going to be able to know when the model shouldn’t be used anymore?
Besides, any automation to D1 can also be applied to options and other areas of trading.
Don’t worry about automation. 20 years ago we were told not to study computer science because all of these jobs would be outsourced to India, and yet the tech industry is flourishing and we still have a bunch of CS/DS engineers in Silicon Valley making $500k+ per year. Technology will evolve but there will always need to be humans to control this technology.
Thank you.
Can confirm. Was coding Python since day one on the D1 desk.
This!
I think it's highly dependent on the team in Delta 1. Certain teams like central risk or etf trading can be pretty quantitative and highly model driven which the traders needs to be fully aware of. I've heard prime brokerage can be underhwleming. As the name suggests you're mainly just dealing with products that have a linear risk so you won't be doing options. You get to work closely with hedge funds which is good exposure but not sure how this translates into getting to one.
Echo the guy above. Delta one is just the product..there are so many teams in D1. like this guy said, desks like central risk/ETF market making are very quantitative and more than 90% of your work is gonna be building algo/trading system...etc, and of course needs solid math knowledge.
but prime teams are also in the D1 desk...you know..like stock borrowing and lending team,,I never got the impression that they are technical/quantitative in any sense, and they tend to just stay at the bank rather than exit to major HF risk taking position. Not to undermine their purpose in the bank/profitability. Its a great desk when it comes to making stable,,not high/not low.. with minimal risk. If ur not really interested in exitting to HF/Props shop it's good.
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