interview questions arbitrage trading
Hey fellows,
In exactly 5 days I have my first-round interview with a London based arbitrage trading house for the position of Junior trader. I know what to expect regarding behavioral questions (team, motivation, etc.) but technical questions is something different.
So I really don't know what to expect on technical questions?
PS: It is good to note that I have a background in BA and not in math ;-)
Can someone post some examples regarding technical interview questions?
Thanks.
your backjground is more than fine, otherwise they wouldnt have brought you in to interview.
By the sounds of it there will be more emphasis on technicals than compared to a bank just because they like to see you have some knowledge at smaller places (if you PM name of the firm i can provide more insight).
There are tons of sources for technicals inlcuding mine which is found on my site or WSO's technical guide.
You are right derivstrading, but stil. My resume was excellent (according to them).
But techical is a very broad word. I read all info I could find about the company. I know what arbitrage is and how you can profit from it, etc. I know things like if you flip a coin 6 times, what is the change of getting 2x head in a row. I know how to explain black-scholes model, put-call parcty, etc. If they talk about the economy, etc. I watch Bloomberg, read the financial times, watch stocks for, I believe, 5 years now.
But I am not a math-wizz. And since this is one of the few job interviews I have ever had in trading kind of jobs, I don't know what to expect, especially since a trader will join the interview. I read a couple of chapters of Hull, read the entire Vault book on both sales & trading, finance interviews, and more.
So if somebody had a related job interview, on for example, derivatives trading, and could post some questions (don't have to be a lot, but just to get an idea) I would be happy.
Kr.
tbh, knowing put call parity and being able to explain Black Scholes are very basic and introductory things. They will most likely try to test your knowledge with a bit more applied questions. If this is an options shop, you are much more likely to be asked about greeks and their dynamics. For example:
Basic: Long 100 strike call, spot at a 100, what happens to your delta as the spot moves higher? Intermediate: Explain in terms of being long a call, the idea of vega convexity Advanced: Long 95/100/105 butterfly, spot at 100 and vol at 20%, spot moves down to 98 and vol rises to 22%, what happens to your delta/gamma/vega?
If they see you havent read up on this stuff, they will most likely resort to more mathsy brainteasers or mental maths. Now in no way you need a math degree to answer 90% of these, but you need some founding in probability so id at least look over Bayes Theorem and Binomial probabilities. Again they are most likely not looking for a math whizz if they are bringing you in, just someone who can think accurately and quickly.
Another angle they could take is to look at how creative you are, ie ask you to come up with some sort of arbitrage strategy on the spot or something along those lines.
But you never know what they will throw at you until you get there, cuz there is too much variance in these interviews, and it hugely depends on the person.
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