FX Options Interview [Business Analyst]

Hi All, Just needed little help from all you AF’ers. I have an interview scheduled tomorrow for a Business Analyst (+ IT) role for the FX Options / Forex Trading business. What questions should I expect from the FX Option perspective (Currency Swaps??), I have just cleared L1 and that knowledge is all what I have with me. - Dinesh S

FX options are not currency swaps and it is not at all clear that they would be trading both. Your level 1 stuff should prepare you fine for this. I guess if you want to sound in the know you should know: a) FX options market is wildly deep with existing contracts of probably 100B or close b) FX options are usually straight-up options to buy and sell currencies but options on futures contracts exist but are not as deep c) Prices are quoted in delta/vol terms (i.e., "25 delta Euro options are trading at 12 vol" or whatever) not price/rate d) The difference between underlier and numeraire. The numeraire is the currency that the option is measured in (i.e., it costs ) and the underlier is the other one. e) Know that the vol depends on which currency is the numeraire f) Know basic currencies (e.g., the Swiss use francs, the Japanese use yen, Thai-people use baht, etc…)

Thanks a lot Joey, I’ll research on them tonite… I dont want to miss out on an opportunity to work with the traders. Will give in my best shot tomorrow.

Hey Dinesh, Sounds like kinda do what you are interviewing for. I’m an FXO analyst (OTC and ETOs), but I also handle futures and the commodities products. (On the biz side vs. IT/development side.) What we learned for CFA Level 1 should suffice for the interview (I just cleared L1 as well). Not sure how deep the interviewer will go, but maybe also brush up on the Greeks, basic Risk Management, and the black scholes model - ie. the inputs that go into option pricing like spot, strike, time to expiry, the domestic interest rate, the foreign interest rate, and volatility. good luck!

Good luck Dinesh. :slight_smile: