Rates Vol vs Credit Derivatives
Could somebody discuss the pros and cons of trading credit derivatives/macro credit vs rates vol? Both seem like interesting and lucrative desks, but it would be great to hear about some of the differences and similarities between the work and opportunities on each desk?
From my opinion, macro credit is more versatile than rates vol, but I would argue it is slightly less complex as they deal with far less complexities on the vol surface (simply cuz it’s a less developed vol product). However, for stuff like CDX/credit etf vol, the underlying is more complex, so the two might be equally quanty in that case. Macro credit also does correlation products like tranches and off the run CDX, which will be quite quanty and add a layer of complexity with the micro elements (following credit quality of individual companies in the index/tranche). I may make the case that macro credit touches a lot more asset classes and is more versatile in terms of which shops you can work at if you’re looking to exit. CDX looks at credit, rates, and equities, particularly when it comes to correlation, so it’s a highly macro desk that is a bit more broad with exposure whereas rates vol will give you deep knowledge of all rates products and great exits to a macro hf (particularly if in gamma pod). Both are great desks and probably the most technical in their respective asset classes
What products are traded within “gamma pods” and “Vega pods”? Are one of these pods more desireable than the other?
Gamma is swaptions with =1 year till expiry. If you trade gamma at a bank most of your counter parties will be HF’s hence the exits
1y expiry options such as swaptions, sofr options, and mbs options were traded out of the gamma pod at my bank
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