Quant Derivatives Trading
I'm currently in a rotational program doing equities derivatives trading with a quantitative focus at a bank (one of Big 3). I was wondering what career trajectories and overall outlook/exit opportunities might look for these different product types within derivatives:
1. Index/Variance/Vol Trading (Variance Swaps)
2. Flow Trading (like single stocks)
3. Exotic Products (Autocallables, Exotic Options)
4. Corporate Derivatives (Convertible Call Spreads, Share Buyback Trading, Exotic Products for Corporate Flow)
bump
Index is great. A lot of index vol trading is rooted to risk premium in the surface itself, you learn a lot about time-tested models and strategies foundational to volatility markets. Exit opp is a hedge fund / prop shop.
Exotics will make you very marketable to hedge funds. At an exotics desk, you are selling exotic derivatives to clients and then hedging the risk off your book, which teaches you a lot about analyzing and managing risk from different structures.
Flow trading can lead to the same if you're doing more quantitative stuff I believe.
Corp derivs is a bit of a dead end imo. Too markets oriented skillset to do private markets investing, and not quanty or trading oriented enough to trade at a hedge fund.
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I really don’t know enough. You did acknowledge you’re aware of the limited HF opps. Only natural exit opp I can see from that seat is doing the same thing at the client side
first 3 can help you get a role at vol funds. ignore the last.
any diff between being in single stock vs index?
Single stock will be more dispersion style strategies than straight risk premia. Honestly, there are more difficulties managing single stock options than index, and it’s great for learning. Data and research is relatively less for single stock, also less liquid, I think most vol funds are likely doing both and get the sense single stock has picked up in recent years.
cheers, appreciate your insight
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