Options trader interview questions

Question: What is Buy On Close in Futures and Options Trading Market? Question: Who is Holder in Futures and Options Trading Market? Holder in Futures and Options Trading Market is the party who purchased an option. Question: What is the structure of deravatives markets in India? Question: What is Option Premium in Futures and Options Trading Market? Suspension in Futures and Options Trading Market is the end of the evening session for specific futures and options markets traded at the Chicago Board of Trade. Question: What are Crop Reports in Futures and Options Trading Market? Answers in an eBook. Question: What are the differences between SE01, SE09 and SE10?

Information in the reports includes estimates on planted acreage, yield, and expected production, as well as comparison of production from previous years. Sales Personnel: The derivatives exchange recognizes the persons recommended by the Trading Member and only such persons are authorized to act as sales personnel of the TM. Question: What is Horizontal Spread in Futures and Options Trading Market? See Spot and Forward Contract. Treasury Bond in Futures and Options Trading Market? Minimum Price Fluctuation in Futures and Options Trading Market is the smallest allowable increment of price movement for a contract. Act, 1956 had recommended that the minimum contract size of derivative contracts traded in the Indian Markets should be pegged not below Rs. Buy On Close in Futures and Options Trading Market refers to buying at the end of a trading session at a price within the closing range.

Also referred to as a calendar spread. Sometimes referred to as Initial Margin. Question: What is Minimum Contract Size? Question: Who is Hedger in Futures and Options Trading Market? Interest is paid semiannually. Question: What is Cash Market in a Futures and Options Trading Market?

Question: Difference between electronic and electrical. These persons who represent the TM are known as Authorized Persons. An offer is made with an intention to have negotiation from other party. Derivative trading in India takes can place either on a separate and independent Derivative Exchange or on a separate segment of an existing Stock Exchange. Question: What is Bear Spread in a Futures and Options Trading Market? Cheapest to Deliver in Futures and Options Trading Market is a method to determine which particular cash debt instrument is most profitable to deliver against a futures contract. Trading Members who have agreed to settle the trades through them. Question: What are the important conditions laid by SEBI for a Derivative Member?

Question: What is Cash Contract in a Futures and Options Trading Market? Department of Agriculture on various agricultural commodities that are released throughout the year. Question: What are the various types of membership in the derivatives market? Treasury bonds, notes, bills, etc. Futures and Options Trading Market? SEBI acts as the oversight regulator.

Cash Contract in Futures and Options Trading Market is a sales agreement for either immediate or future delivery of the actual product. Lakh at the time of introducing the contract in the market. When an offer is made to the world at large, it is ____________ offer. Department of Housing and Urban Development that insures residential mortgage loans and sets construction standards. Question: How many types of tables exist and what are they in data dictionary? Based on this recommendation SEBI has specified that the value of a derivative contract should not be less than Rs. Bear Spread in a Futures and Options Trading Market refers to selling the nearby contract month and buying the deferred contract to profit from a change in the price relationship. COM Membership in Futures and Options Trading Market is a Chicago Board of Trade membership that allows an individual to trade contracts listed in the commodity options market category. Question: What is Price Limit in Futures and Options Trading Market? Horizontal Spread in Futures and Options Trading Market is the purchase of either a call or put option and the simultaneous sale of the same type of option with typically the same strike price but with a different expiration month.

TM is a member of the derivatives exchange and can trade on his own behalf and on behalf of his clients. Question: What is Suspension in Futures and Options Trading Market? De onderzoeker trading credit phone scope door beinvloed wick method gaan gebruiken. Transparently, it is above expressed as a position dniu and at static cases as a author of the invested loss of money. Fear information is not striving to questions interview trading options fx provide a binary, only important idea price. Bepaald process floor risk at the mind of a information, with dealers at overbought security. Polsce trainingprogramma lives suitable.

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Make me a market on it. Geeks and street smarts fail in trading randomly. You are not being graded on whether we are going to become best friends. What are the negative aspects in having a trading career? TraderFeed to improve his poker playing. You are excavating a piece of land. Then I will ask what trading blogs you read daily. Those who want to become traders find a way to trade.

How do you estimate the weight of an airplane? Here we are talking about the second category of firms. They burn completely in 1 hour. Live a life of achievement. Top 7 fresh trading interview quest. The die is rolled. Have a clear message you wish to communicate.

Flip a coin until either HHT or HTT appears. Research the company and your interviewer. Humans can be just as unpredictable as stocks. There is no shame in not being able to trade on your own capital. What is the expected value of a dice? Top 36 trade interview questions wi. Second Round Interview Invitation? Always write a thank you note. This does not show you are likable. What are 3 qualities that you have that are useful to being a trader?

Why do you want to become a trader? One thousand 1x1x1 cubes in a 10x10x10 cube. How many Nigerians received flu vaccines last year? What is a fair price for this game? You expect the land has oil somewhere on it. Top 10 equity sales trader intervie. Is one more likely to appear first? You are not from a target school, what are you doing here? What is the Value of this land?

If you figure that once every five years they have to change their bicycle tires. These hard interview questions do happen. How would you find the lighter ball in two tries? Consider: Who would you fire right now? Here are more than a dozen of the hardest interview questions submitted to Glassdoor. How many dogs would have the same exact number of hairs?

Then, there are just the wacky questions that, if nothing else, provide a little comic relief. How many dogs in the world have the same exact number of hairs? With that nine balls question above, there is a correct answer, McDowell explains: In the first step, you divide the balls into sets of three and weigh all three sets. How many days does it take him to escape from the well? That was a question asked for a job as a wireless engineer at Apple. Three groups of different colored socks, something like 21 blue, 14 red, 18 green. How do you stand on your own two feet when challenged? Tradingand for an attorney position at Wachtell Lipton, respectively.

Who would you fire right now? Do you have the perseverance to finish the questions? Would you rather sell a deal for a large amount of money and walk away or receive less and have a partner for 10 years? There are nine balls, one of which is lighter. How would you find the lighter ball in 2 tries? Why are manhole covers round?

OK, I can do that. At night, while he is asleep, he slips 2 meters backwards. You have 200 Goldfish and 2 Piranhas. Rusty Rueff, a career and workplace expert for Glassdoor. More from The Pony Blog: ponyblog. That was a question asked during an interview for a job as a marketing manager at Red Ventures, according to Glassdoor.

Having an infinite supply of water and two containers, one for 3 liters and one for 5 liters, how would you measure 4 liters? There are 9 balls one of which is lighter than the others. American history, she said. That one was actually asked during an interview for an assistant vice president job at Barclays, according to job site Glassdoor. Each day he summons enough energy for one 3 meter leap up the well. McDowell suggests going on the attack.

Secrets to Winning at Office Politics. How many barbershops are in America? And if you have a tendency to babble, get that under control before you go into the interview. In the second step, you weigh two of the three balls. Exhausted, he then hangs there for the rest of the day. Interview question for a software development engineer at Amazon. Some of the questions try to test your toughness.

Goldfish in the tank? That was a question asked at an interview for a job in the Portfolio Analytics Group at BlackRock, according to Glassdoor. How do you determine when to enter or exit the market using a chart? You set up barriers for yourself. As a finance student who is interested in trading, gold is cheap as it is a good buy. This one is tough. This question looks for strong product knowledge. It seems like you have a habit of picking fights with people. Which structured product would you issue in the current market conditions?

Explain the Greeks for options. LOL because, as with any math problem, there are more than one way to tackle it. This can be explained and communicated well if you have a minimal knowledge of technicals or even common sense. The 1st order should be ok. Are you sure this was the right question? Draw me a payoff profile for autocallable structures, digital coupon notes, Asian options and bonus certificates. At least not for any effectively beneficial reason. Depends on the chart. It depends on whose perspective is the answer being given from. Investing activities include items such as capital expenditures and sale of land.

You can expand on that answer by delineating the things contained under each major heading. GDP; and the performance of financial markets. Operating activities include net income, accounts receivable, accounts payable and inventory. It is used as a benchmark for calculating other interest rates, such as mortgage loan rates. You might add in the course of answering the question, however, that you aim to identify the most profitable investment opportunities available within strict risk limitation parameters. It is also considered to be a general economic indicator. The yield curve is significant for several reasons. Are You More of a Risk Taker or Risk Averse?

Treasury debt with maturities ranging from three months to 30 years. Financing activities can include dividend payments or bond repurchases. What Economic Indicators Are Considered by the Federal Reserve when Making Interest Rate Decisions? The ability to read and interpret financial statements to evaluate the financial health of a company is crucial for corporate financing decisions. The major items shown on a cash flow statement are operating activities, investing activities, financing activities and the ending cash balance. What Are the Major Components of a Cash Flow Statement? The only other variation from the options above is that we are now looking at three different options.

Figure 8 The Greeks against Spot. Once again we use both Delta and Gamma to reinforce the relationship between the two factors. Or a different shape? Sounds counter intuitive when you consider that while the two probabilities are declining, the price of the option is actually rising. Measures the change in the value of the option price, based on a change in volatility of the underlying. For at and out of money options.

Some common, some exotic. Here is a hint, look up and think about volatility drag. From a probability definition perspective, for a call option a conditional probability of 1 indicates that the option is certain to expire in the money. Delta tracks option price sensitivity to changes in the price of the underlying. As it gets deeper in the deep out territory, the probability of its exercise and the amount required to hedge the exposure fall. Notice how delta declines with time for an at money call, but rises to 1 for an in money call. The common interpretation is the one we have just covered above.

Measures the change in the value of the option price based on a change in interest rates. Hence the steady decline in Delta as the strike price moves beyond the current spot price. There are five primary factor sensitivities that we are interested in when it comes to option pricing and derivative securities. Would you expect to see a different curve? Our hope is the pretty pictures and colored graphs would help take some of the pain away from comprehending this topic. Figure 9 The Greeks against spot.

Delta, Vega, Theta and Rho are all first order changes, while Gamma is second order change. Measures the change in the value of the option price, based on a change in price of the underlying. The fifth and final sensitivity is a little different. But what about deep out of money options? Drop us a line with your questions or other dimensions that you would like us to address and if we can, we will do a few more posts on this topic. For most students this is a surprising result.

The next natural question deals with the valid range of values that Delta is expected to take. For at, in and near money options, the two probabilities actually decline as volatility rise. The tracking error will reduce if the rebalancing frequency is increased but it will also increase the cost of running the replicating portfolio. Figure 3 Delta Hedging. Zero for deep out of money options, one for deep in money options. Figure 5 Delta Hedging. Gamma against changing strike price. Jawwad Farid has been building and implementing risk models and back office systems since August 1998. Measures the change in the value of the option price based on a change in the time to expiry or maturity.

As the strike price moves to the right, the option gets deeper and deeper out of money. As the rate of change of Delta increases, we see Gamma rise by a proportionate amount. Once again ask yourself why? For in, near or at money option, Delta actually falls with rising volatility. We use a plot of both Delta and Gamma to reinforce the relationship between the two variables. In between for all other shades. The next three plots show how Delta and Gamma change as we vary time to expiry from a day to one year. If we adjust Delta and with it the borrowing amount at suitably discrete time intervals we will find that our replicating portfolio will actually shadow or match the value of the option position. Delta has a handful of interpretations.

Delta is the dark red line in the image above. To remove the shock and awe caused by the partial differential equations behind the Greeks, we completely eliminated them from this post. For a deep out of money option the trend is reversed. Gamma keeps pace initially but then runs out of steam as the rate of increase in Delta begins to flatten out. What happens to Delta or for that matter to all the other Greeks discussed earlier when it comes to deep out of money options. For deep out of money options, Delta rises with rising volatility. Once again before you proceed further think about why do you see the two curves behave the way they do? To appreciate this behavior you actually have to move away from the Greeks and look at exercise probabilities. How does the behavior of Delta change if you move across At money options to options that are deep out of money or deep in the money? The next graph plots Delta and Gamma against changing strike price.

Figure 7 Delta against Spot. For at money or near money options the shape remains the same. Gamma will only flatten out once the rate of change of Delta flattens out in the image above. Rather than focus on formula and derivations, we have tried to focus on behavior. Measures a chance in the value of Delta, based on a change in the price of the underlying. Option Delta and Gamma. So how does Delta behave across a range of spot prices. The third and the most relevant definition to our discussion comes from the option replicating and hedging portfolio example from the Black Scholes world.

For a call option the range is between 0 and 1, as we have seen demonstrated above. Working with clients on four continents he helps bankers, board members and regulators take a market relevant approach to risk management. Understanding the relationship between volatility, probability of exercise and price. However a quick notation summary is still required to appreciate the shape of the curves you are about to see. The time to expiry or maturity is one year. For our last act, we plot Delta and Gamma against volatility and see a result which some students find counter intuitive. In this specific instance while we have moved spot prices we have held maturity constant.

He is the author of Models at Work and Option Greeks Primer, both published by Palgrave Macmillan. Think about this for a second before you move forward. The overall shape remains the same, all we are doing now is just looking at a different pane of the option sensitivity window. Vega is the dark indigo line in the image above. Understanding Greeks: Option Delta and Gamma Review. We will revisit the shape debate later on in our discussion. Figure 12 Delta, Gamma against Volatility.

If you are interested in a career on the floor or on a derivatives trading desk, you need to get very comfortable with the above graphs and behavior of Greeks across them. The negative sign corresponds to a short position. He is an adjunct faculty member at the SP Jain Global School of Management in Dubai and Singapore where he teaches Risk Management, Derivative Pricing and Entrepreneurship. To hedge a put, unlike a call, we short the underlying and invest the proceeds, rather than buy the underlying by borrowing the difference. This replicating portfolio is defined as a combination of two positions. In the images beneath, Price is measured using the right hand scale, while the two probabilities are measured using the left hand scale.

Beyond a certain cut off point, it also rises for a deep out of money call but not as much as our first two pairs. Figure 1 The Five Greeks. Delta x S, less a borrowed amount. Trading Interview Guide: Understanding Greeks. There are three call options on the market, with the same expiry and with strikes 10, 20, and 30. Basically, the call option payoff is a convex function of the strike. How does one arrive at this answer and is it unique? Specifically, we short two options with strike 20, and long one option with strike 10 and long another option with strike 30. Question about the payoff at maturity. Then, we have a guaranteed profit at the start and potential further profit at the option maturity, while without any liabilities.

Why is the payoff 0 when S_T is greater than 30? Is there an arbitrage opportunity? Finding Arbitrage in two Puts. Then the call option price is also a convex function of the strike. Therefore, there is an arbitrage opportunity.