Derivatives Trader Interview Questions and Answers

I primarily use technical analysis and quantitative models to make trading decisions.

• I rely on chart patterns, indicators, and statistical analysis to identify potential trading opportunities.

• I also incorporate risk management strategies to protect my capital and minimize losses.

• I may use algorithmic trading systems to execute trades automatically based on predefined criteria.

• I continuously monitor market conditions and news events that may impact the derivatives market.

• I ada...read more

Delta is the rate of change of an option's price with respect to the underlying asset's price. IV is a measure of the market's expectation of future volatility.

• Delta measures the sensitivity of an option's price to changes in the price of the underlying asset. For example, a call option with a delta of 0.5 will increase by $0.50 if the underlying asset's price increases by $1.

• IV (Implied Volatility) reflects the market's consensus on the future volatility of the underlying as...read more

Options strategies like strangle and ratio involve buying or selling multiple options to profit from market movements.

• Strangle involves buying both a call and put option with different strike prices but the same expiration date.

• Ratio involves buying or selling a different number of options to create a specific risk/reward profile.

• Both strategies can be used to profit from volatility in the underlying asset.

• Strangle can be used when expecting a significant price movement but u...read more

Yes, I am proficient in trading software such as Bloomberg Terminal, Eikon, and Thinkorswim.

• Proficient in using trading software like Bloomberg Terminal, Eikon, and Thinkorswim

• Able to execute trades, analyze market data, and manage risk using trading software

• Familiar with order types, charting tools, and research capabilities of trading software

Call and put options are financial contracts that give the holder the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a specified price within a specified time period.

• Call option: gives the holder the right to buy the underlying asset at a specified price within a specified time period.

• Put option: gives the holder the right to sell the underlying asset at a specified price within a specified time period.

• Options are commonly used in financial ...read more

To place a buy order, you need to specify the security, quantity, price, and any other relevant details.

• Specify the security you want to buy (e.g. stock, bond, option)

• Specify the quantity of the security you want to purchase

• Specify the price at which you are willing to buy the security

• Consider any additional details such as order type (market, limit, stop)

• Submit the buy order through your trading platform or broker

Placing a ratio order involves specifying the quantity of one security to be bought or sold in relation to another security.

• Specify the ratio of one security to another in the order

• For example, a ratio order could be to buy 2 shares of stock A for every 1 share of stock B sold

• Ratio orders are commonly used in pairs trading strategies