Career Advice Question for Options/Vol Trading: Rates vs FX at BB

Hi,

Summary:

I am new to this forum, but I will try to keep it short: I am new graduate and am in the process of considering careers at a BB in options/vol trading. I have offers from rates and fx (both options desks in the USA) and am trying to decide between the two. I would appreciate any advice. I come from a STEM background (target) if that is of any use in setting the context.

More specific questions:

  1. What are some differences between the two jobs? I know there are lots of similarities, but keen to hear about the differences.

  2. Are certain banks better for certain asset classes? If so, could anyone provide a brief outline of which banks are known for what? I have seen similar questions in older posts, but wondering if they are out-dated?

  3. How do the exit opps to HF compare, etc.? To me, it seems like FX options is a bit more niche/lots of people trade it only as a hedge compared with rates...

  4. Any general salary differences? (I guess it depends on performance, but just wondering if there are general trends)

  5. Any differences in scope for use of coding? I would be keen to leverage some of the more technical aspects of my background, so wondering if a particular asset class is better suited to that

Personally, I am leaning towards rates as product seems much more interesting to me (I find it hard to care about underlying FX spot), but just wondering if the emergence of crypto is going to be a massive money-maker which could increase salary... Realistically, I won't know whether I actually enjoy/am suited to the job until I do it, so just trying to scope out some more info now.

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (14)

Most Helpful
  • Intern in S&T - Equities
Aug 17, 2021 - 1:55am

Pretty similar products. I've noticed FX vol attracts a lot more STEM-y and Data Science-y people as opposed to rates, although rates has its fair share of quantitative people too. Rates is a lot more qualitative and subjective though. Much more intuitive than FX, which is more problem-solving.

Comp is based on desk performance and PnL - if a bank's rates vol desk is bringing in $100mm PnL vs. an FX desk only bringing in $30mm PnL, there's going to be big bonus differences.

For FX I'd say UBS, JPM, and DB are really good. For rates, JPM, Citi, GS, MS. Although most BBs should have something solid.FX is a lot more coding-heavy. Decent HF exits. Rates is less coding heavy and more high-touch (humans involved) but can entail very handsome exit opps. Rates vol trading is a highly-respected role on the buy side. It's very far away from getting automated.

Aug 17, 2021 - 4:36pm

Many thanks for writing out the response, that is greatly appreciated. For reasons out of my control, both offers are no longer available (due to administrative reasons). I just had quick follow-up questions:

1. Is pay for a desk dependent on just raw P&L, or is it adjusted for the amount they are expected to make? I.e. some rates markets are naturally bigger than FX options markets and thus will inevitably make more P&L; is this accounted for in the pay or not really?

2. Would it be possible to move between them (e.g. from FX to Rates)? The reason I ask is that I do like the BB that made the offers, and my choices are: join FX options desk and move, OR re-apply to another bank (just seems like quite a bit of effort to go through the whole process again)...

Lots of people have told me to just join and then I can move; but movement is usually based on success, and I am not sure how successful I could be if I don't enjoy a product (e.g. I don't imagine I will be happy to dedicate 80+ hours/week to FX vol desk). (Also, I have no idea how long it would take to make that move)

  • Intern in S&T - Equities
Aug 17, 2021 - 11:45pm

I'd say so. Headcount is the second biggest factor behind PnL... if a $100mm PnL desk has 10 traders and the $30mm PnL desk has only 3, I'd call that decently even. The more profitable desks are bound to have more headcount, so all things balance out in the end. 

FX to rates is a very doable transition. I'd say take FX if you like the bank... S&T is usually very good about internal mobiltity within desks. I know people who went from Prime Brokerage sales to algo trading and even one guy from risk management to equity derivs to exotic rates. As long as you perform well, your desk should be very supportive of a lateral 1-2 years in. Don't worry about finding the perfect fit when you're young, the key is to keep learning. 

Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
  • Prospect in S&T - Equities
Sep 9, 2021 - 5:51pm

On these volatility/derivatives desks what kind of coding in python do you need to know and what should I be trying to develop? I'm going to be ending up on a crypto vol desk and didn't get tested too much as an intern on Python.

Sep 10, 2021 - 9:04pm

Sunt molestiae ut aut animi nostrum dolorem earum. Eligendi inventore in suscipit occaecati officiis non.

Odit est veniam consequatur aliquam necessitatibus facilis. Doloremque nihil minima consequatur dolor. Voluptas excepturi minima quaerat aut ratione minima ipsa. Dolorem officiis ut porro. Officiis doloribus harum suscipit rem sequi rerum.

Quaerat autem sit voluptate accusamus. Omnis voluptas accusamus nisi sit dolorum amet. Saepe saepe ipsa aut. Omnis cum et tempore. Asperiores dignissimos totam numquam molestias.

Nam adipisci sint corrupti cumque enim non velit. Veniam aut tempora repellendus consequatur quasi eos hic reprehenderit.

Start Discussion

Total Avg Compensation

September 2021 Investment Banking

  • Director/MD (10) $853
  • Vice President (39) $363
  • Associates (220) $232
  • 2nd Year Analyst (134) $154
  • 3rd+ Year Analyst (30) $147
  • Intern/Summer Associate (103) $143
  • 1st Year Analyst (486) $135
  • Intern/Summer Analyst (377) $82