Equity Derivatives position Interview


can someone please guide me as to what kind of questions to expect for an entry level equity derivatives analyst position at a major investment bank?

The title sounds a bit fancy but the position is in operations. Feedback will be highly appreciated. especially from those who are at present working in operations or have previous work experience in area.

Thank You.

What experience base have you got already? Is this your first role in finance?

I don’t have an operations background but I do have a lot of experience in the Eqt. Deriv space.

If they are going to ask you basic eqt. deriv questions, they will likely cover the following:

  1. The greeks: Delta, Gamma, Theta, Vega, Rho. What are they, how is each important. Wouldn’t hurt to have a rough understanding of how each of these work (i.e. you have higher gamma when spot price is nearer to the strike price and closer to expiry, your vega is higher longer to expiry, delta becomes more binary as you approach expiry (high gamma effect), etc. The greeks are the heart of Eq Derivs, so really helps if you can show that you understand these.

  2. Understand payoff diagrams for different options and option combination. What does being long/short a call/put look like. What does buying a call and selling a call with the same strike look like (i.e. a synthetic position).

  3. Implied volatility vs. Historical volatility. What’s the difference?

They might also throw a situational question at you. Something like, if you have 3 traders and all chasing you on a position break, and you have your boss chasing you on a month-end report she wants generated how would you handle the situation? Things to remember here are prioritizing the issues (which position breaks are riskier, your boss’s report isn’t important) but also working as a team (i.e. can you get your colleague to help you out), and with regards to your boss, be able to diplomatically put her off so that you can deal with the important issues instead of prioritizing her requests just because she’s your boss.

Another situational is how to deal with an angry/rude trader chasing you. Just have an answer ready that shows that you are not going to lose your cool and punch the trader. Your job is to deal with angry traders and put them at ease. Keeping traders updated of the situation is very important, mention this and you’ll score points. You might be working on something but they need to know that you’re the man and you’re on top the situation.

Hope that helps. Good luck.