I know that my personality is very suited for this position (the MD of the firm is the one who made that conclusion), so now i am being interviewed formally...
what advice can you guys give me...ITs a Canadian IB, but pretty big (clue: they make big losses when they lose)
what should i know inside out????
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if the MD likes you, what are you worried about?
hes the fixed income MD, this is derivatives, and also its for another city than the one he manaeges....
ok...well know some of the main market levels, and if you can talk about black scholes more power to you.
what you mean by market levels??? black sholes is basic....should i know how to value swaps, CDO, MBS etc?...im not aware what kind of derivatives they deal in, so ill try to find out...but if i cant ill refreshe myself for all of them.
i trade opetions on my own account, so i have a feel for them unlike bookworms....
im super familiar with the markets, follow bloomberg term for like 5 hours a day.
thanks in advance
"what you mean by market levels??? black sholes is basic"
where the 10 yr is etc.
basic, ok....if you know the black scholes parameters can you figure out the probability of an option finishing in the money?
using a binomial wecan do that...or calculating N(D1), N(d2)...no??
do i really need to know this??
no, you most likely won't be asked anything near that level. i'm just glad you didn't say 'it's the delta'
ok first of all, is it even possible an IB will consider a candiate so stupid as to refer to the greeks for probability of in the money-ness??
second...
what should i know in terms of SWAPS, Futures, and other derivatives??
"ok first of all, is it even possible an IB will consider a candiate so stupid as to refer to the greeks for probability of in the money-ness??
second...
what should i know in terms of SWAPS, Futures, and other derivatives?? "
uuuh, most sales people i know think delta is the same as the probability an option finishes in the money. now granted it's usually close enough, but it's not uncommon.
know what swaps are and that should be fine. which has more volatility, a 5x10 libor cap floor straddle or a 5y5y swaption straddle?
Am I right to think that a major part of getting started in derivatives trading/sales is about understanding the jargon? I've landed a derivatives sales FT role at a big IBank, but I don't have a clue about swaption straddles. I got the job through recommendations from the IBD side of the bank, so no experience there. I'm currently reading John C. Hull's Options, Futures, and Other Derivatives as my bed time reading. Will understanding the concepts in the book help translate some of the jargon into understandable language? Or are there specific jargon-busting books out there that could come in handy as well?
Also, has anyone read "Traders, Guns and Money: Knowns and Unknowns in the Dazzling World of Derivatives" by Satyajit Das? Any good?
lol...no idea, gotta review my level 2 notes...
Traders, Guns & Money - Great read and intro into the world of derivatives. Not quite as technical as I would have liked, but then again it's not a textbook.
i got the call...md told me it looked like i was no1 of the bunch...alsotold me they trade vanilla interest rate swaps and vanilla cross-currency swaps
im shitting myself as speak....
Cross currency swap question:
You are paying JPY on a 10y JPY-NZD cross currency swap (notionals exchanged).
did youdid you issue the bond , or are you paying for it???
nevermind..my page didnt load correctly so i could read it properly...
i believe its a nagative carry. Assuming no variation in FX on both sides (at T=10), we can cancel out the notional. You borrow yen, then you swap the YEN for NZD. You pay for the NZD in NZD dollar rates, and recieve the same yen rate you initailly borrowd at ..right?
If im wrong can you help me visualize or conceptualize it... i mean i know how carry works, have done it myself on an FX platform...but i know these days you implement carry through swaps. That kinda slows me down...
thanks in advance
Right idea but you have the currencies around the wrong way - in the swap you described you're paying NZD.
Also, it's dangerous to think about 'just canceling out the notionals'. It's not like a single currency swap - here the second notional exchange is off market. This is where the answer to the last question comes from. (think about interest rate parity, and how the value of the swap to both parties evolves over time)
Don't think that you "won't be asked ins and outs of derivatives pricing". I literally got classed on it recently.
Ok lets take this example further. You are a NZD company looking to get in the Japanese market. But you are not well known, so you cannot get such a great rate for borrowing yen.
Lets say you issue a NZD bond for 10M at 6%. You find Mitsubishi bank in Japan, who knows you and is willing to swap with you. They let you borrow yen at 1.00%, and pay you NZD rate of 5.9%.
So you exchange the notional, and pay yen at 1%, and they exchange notional and pay NZD at 5.9%. why is this a negative carry trade exactly...?
In the swap you just described, you are paying 1% JPY and receiving 5.9% NZD, so this is positive carry. Is the final notional exchange expected to mark up or down to you?
derivatives trading interview HELP (Originally Posted: 01/06/2013)
derivatives trading interview coming up this week, anyone in the industry want to tell me what kind of derivatives you work with? what do your interns usually work with? how do usually ask them technicals/behaviorals?
thanks guys
How did you even get an interview if you're asking what kinds of derivatives the industry works with? It will be a good experience fro you to get absolutely crushed in an interview. Maybe it will make you a) figure out if this is really what you want to do, and b) if so, actually start reading up on these things.
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