Guys,
I am hoping to get some insights on convertibles. They seem to be a rather untalked about area.
What would you thnk of a junior guy starting off in convertibles trading?
What is the money like in this area?
How would job security be gong forward?
Would this be an interesting part of the business where you have to understand both credit and equity?
From a fairly unknowledgeable perspective it seems potentially interesting to me.
Thanks!
First post.. I interned at a BB in London last summer and spent some time on the converts desk.
They sat within Equities, next to the single stock vol guys, but spoke quite a bit with the credit guys. It seemed like a cool space, but they said they only really hired people who had traded something else first, and told me I would be better off ending up there rather than starting, as it is quite niche.
One other thing is that demand for converts can completely dry up in risk off periods, so for example in the summer there was barely any market for most of their bonds, they were the last guys off the floor most evenings and seemed quite stressed out.
Seemed quite cool though, they trade pretty much everything because they hedge with CDS and IRS, as well as the usual delta hedging involved with a vol trade.
Would be interested to know more if anyone has more substantial experience.
I would agreed with the above post 100%...I too sat witha converts desk during my summer rotation...Its pretty hard to get into it and the market tends to be very illiquid. I sat with a trader, whose market making basiclly consisted of sending out mass messages to other traders and/or potential clients. Its definitely very niche, and would always be around as this is an OTC market. Its also interesting that its half equity and half fixed income. They sit on the equities floor because all relevent news comes from the equities side, and it just makes more sense for them to be there.
I would highly recommend doing a rotation with them.
Hey man thanks for the info. I am trying to chose desks for my summer internship and I interviewed with a covertibles MD and have been thinking about doing a rotation there. Interesting to hear about how they trade everything, that sounds very interesting....looking forward to more posts
R u full time in London now? I am in England as well...
Well it is cool, just depends whether or not they are looking to take on a grad really. The MD already likes you so you could try find out early on whether or not they have head count, whether you rotate on it formally or not, you can easily spend time there if you already know someone.
Hiring was bleak this summer so I'm doing another internship, PM for any more details.
I knew nobody wanted to talk about convertibles haha
I want a ferrari convertible
touche
I made my own convertible once
^^very interesting to hear. Because of the lack of flow do they end up making a lot of longer term prop trades?
I imagine if I was sitting on a low flow desk I would be doing a good deal of small prop. That was what traders did at my previous internship anyway.
Since we are on the topic, any idea how the money is in Convertibles? I imagine it is feast or famine the way the market can swell or dry up..
I am interested in in because it is the only area I know of where you have to fully understand equity and FI dynamics.
They do end up holding a fair amount of prop. While the ultimate goal is to end up making money on the spread, which is fairly sizable (around $6000 total for a single trade). They're total PnL can vary a lot depending on how their prop end holds up.
So are convertibles so illiquid that almost all trading is done over the phone where traders/sales have to go out and actively find buyers and sellers?
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