exotics vs. delta one
I am a first year analyst and currently face a choice between working on exotics and delta one trading of the same underlying. The delta one desk seems to be quite operational (which I find easily bored of), while exotics is much more interesting and fit my background better. However, in delta one I would get responsibilities much earlier and faster than what the exotics desk has promised me, which makes sense because exotics would take longer to learn how to price and view risks.
Should one should I pick / learn towards? What general advice would you give when it comes to choosing a desk? What is the outlook of exotics vs. delta one? Should I worry about exotics being too niche?
Thanks a lot!
Interested as well
D1 is far, far more transferrable to other companies. If you find exotics fascinating and you love the work, then go for it. It’s definitely more interesting than D1 in my opinion. But the amount of money being made in D1 right now is mind blowing.
Interesting. I thought D1 skills are not that transferable to eg hedge funds and most people just go from D1 in one bank to D1 in another bank.
and why is it now a good time for D1?
In equities D1 is more transferable to Hedge funds than exotics.
Index rebalancing desks are regularly poached by hedge funds as its almost plug and play. Dividend desks are not bad for HF either.
Exo can get you in vol or risk recycling funds. Maybe macro if you do hybrids. But it tends to be a bit longer shot overall.
Would you mind elaborate on why vol/hybirds tend to a bit longer shot for HF? And how is the "plug and play" more valuable then?
I used to run one of the main exo books at a less known bank, decided to give BB a shot in D1, I regretted making the move. The reason it didn’t work out for me is because 1. I had full discretion over my previous book 2. Less political BS. Now in D1 I’m treated like an analyst and running one of the books no one really cares. Your pnl at a bank is a combination of beta + alpha (beta=franchise flow, alpha your value). Depends on what desk you’re on, your beta can be larger so you need to be lucky to be on a desk with high beta so you can move up the ranks at a bank; if you’ve a fat alpha yo can just go to HF.
D1 is definitely more operational that’s why you see more MO guys can make the move. The caveat is that yes it’s easier to transition to HF from D1, that’s cuz the way you trade in vol is more credit/model/market risk heavy compared to D1 (D1 desk is cheaper to run in terms of tech/mode/credit/balance sheet). Also there’s more demand for ops/executional skills at HF so D1 is more transferable that way.
At the end of the day early on in your career, the responsibility you get is important and how strong your specific desk is.
Not questioning what you've said, genuinely curious - What would you do at a HF from D1? Mainly only heard people moving from D1 at one bank to another.
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