Comments (33)

Jan 13, 2010

derive black scholes

Jan 13, 2010

Thank you.

This is for Goldman Sachs Interview. Do you have any other questions they might ask for this position?

it's SA position..

Jan 13, 2010

There are WSO interview guides that probably would benefit you, not too sure about specific questions. Also, I doubt they'll ask you to derive black scholes for a SA position. After all, it is 2010.....

Jan 13, 2010

Understand everything about implied vol

    • 1
Oct 10, 2015

...

Learn More

Boost your resume and land a finance job by passing the FINRA SIE. 264 pages & 1981 smart flashcards written by a former 8X top Fidelity instructor. Try it for 0 bananas here.

Jan 13, 2010

complete nonsense. I interviewed for a GS equity derivs analyst position once actually, a very long time ago. You will not be asked to derive anything. You will not be quizzed on Feynman-Kac. You will not even be asked much about implied vol. GS was, and probably still is, very fit based. They may ask if you know the inputs to black scholes. Or can talk about where gamma is the highest in the life of an option. Be prepared to talk about your background and why you are interested in the desk and the career of trading.

Oct 10, 2015

I got fascinated with equity derivs years ago. The ability to not only hedge against risk using them and/or be able to use them for speculative reasons i.e. buy/sell them with a relatively small amount of capital. However, the returns using them can be exponential.

I also like them because you can bet on events such as use straddles if an event is pending like the results of a lawsuit, earnings release etc. You can control 100 shares of stock with one put/call without investing but a relatively small amount in the premium of the option.

Don't want to sound redundant, but Barron's is a must-read before interviewing in equities or something dealing with equity markets. Skim Bloomberg articles. Have a good macro view as well.

I would research the company. Know why that company in addition to why eq. derivs. Also, demonstrate a love for the equity markets in general. For me, my interest was peaked when I started following the stock market back in high school. I bought my first stock then. Tell your story.

Oct 10, 2015

you want us to tell you why youre interested in the the position..?

Oct 10, 2015

So many ways to go with this.

  1. I get bored with fixed income, so naturally, I preferred equity derivatives to fixed income derivatives.
  2. The non-linear layoffs are appealing to me. I love managing the risk of the greeks.
  3. As long as my client has a view on any stock or index, I will have something to sell them. It doesn't matter if they're bullish, bearish, or neutral.
  4. I posted the below as a response to "tell me about yourself". You can use that framework, even if the specifics are different for you.
SirTradesaLot:

Interviewer: "Tell me a little about yourself."

Me: "In college, I majored in Economics, the 'science' of making choices in a constrained environment to help me figure out what motivates people. I minored in Philosophy to hone my art of bullshitting. Combining these two fields with my natural proclivities has allowed me to separate very large sums of money from untold quantities of people in my 14 year career on Wall Street. Knowing the ins and outs of several large product areas has given me the knowledge of where to best hide fees. This way, the client thinks they are getting a great deal while I am ripping their fucking face off. This has allowed me to garner repeat business from said targets giving me a recurring, high margin revenue base that is portable to your firm."

You may need to adjust based on your personal circumstances, but this works pretty well for me.

Oct 10, 2015

how complicated is trading equity derivatives?

Jan 13, 2010

Thanks guys for your feedbacks.
It's really helpful to me.

For Why trading and why not IB type of question, what kind of answers will looks good?

Thanks

Oct 10, 2015

Is it only the traders? Or some sales dudes as well?

Oct 10, 2015

Remember they don't expect you to know everything.
Know your greeks, just the basics. if they ask you : how do you hedge volatility (gamma)? Just explain to them you don't know exactly how to do this, but you know what gamma is, and you wouldn't mind having them guide you in how to get to the rest.
Or work backwards and show them how to hedge your delta, then show them the relationship b/een your gamma and delta.
In other words - ok if you don't know, just make sure you put some relevant knowledge to work.

If you don't know much, and didn't study much finance they shouldn't ask you much about options, and they will mainly be testing your intellect and how you react under pressure. Don't rush, take a deep breath and ask THEM questions every time you stumble on something.

Read the FT as you said - back to front. Read also about the company you are interviewing at and ask some random questions about stuff you have read recently in the press. Most likely they won't know themselves about what you are asking them, and will be positively surprised you are curious about the company.

You'll find most of what i wrote are generic interview advice, but at a very junior level that's as hard as it will get. Best of luck, I am familiar with your environment, and it's a great one to work in.

Oct 10, 2015

Thanks alot, that is some solid advice.

All three interviewers are traders. HR mentioned it will be a competency based interview with technicals. I come from a physics background so I'm expecting brainteasers and options. My first phone interview with the associate and VP were on options and brainteasers, so I am thinking the upcoming round will be kind of similar. I will read up and be familiar with the greeks by the interview.

Oct 10, 2015

brainteasers and greeks, they will ask you various forms of "how much would you pay to play this game". I would also ensure you have an understanding about probability and risk.

Jan 13, 2010

Some of these people have no idea what they are talking about. Unless you are a MFinEng or a PHD they are not going to ask you to derive BS or know measure theory or ito or any of that. Get real. If someone asks that they are ridiculous. That all takes significant, and occasionally very specific, mathematical background. Most complicated I'd expect is understand the greeks and their relationships.

Oct 10, 2015

Let's start with why you're interested in Equity Derivatives?

    • 1
Oct 10, 2015

if you can't answer this on your own, maybe it's a sign you're interviewing for the wrong position

Oct 10, 2015

i m stranger to this topic and i wanna discus on this topic.
i think this ia a good approach for every one.
Thanks for sharing this information.

Jan 16, 2010

agree with jimbo and revsly.

back in the day when i was interviewing for securities divison at GS, both the executive directors were in eq derivatives. mainly asked about my past experiences, why i want to go into this field, how i would invest money, why they should hire me, why gs, etc. the only technical question i got during superday was:

"you have a bunch of real estate investments in Florida, you wnt to buy insurance on it in case there is hurricane, how should the insurance be priced?" a.k.a how to replicate the payoff of the insurance?

the correct answer was: "buy orange juice futures, as FL is one of the largest orange growing states in US".

then i found out this exact question is in "when genius failed".

Oct 10, 2015

Lets hope MS still exists by time you have your interview.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Oct 10, 2015

Yea... that was my reaction as well...

NEVER lose your BlackBerry
www.conveniencesoftware.com

Oct 10, 2015

ha ya believe me i am hoping for the same thing. this is assuming they are still around and they are hiring .....

Oct 10, 2015

........................

Oct 10, 2015

.....

Oct 10, 2015

"I was sexually abused."

Hahahaha.

Oct 10, 2015
Comment
Oct 10, 2015