Start trading career as an equity option trader?

This is a discussion on Start trading career as an equity option trader? within the General Trading Chat forums, part of the Reception category; Hi all, What are the skillsets that will be developed from starting my career as a trader on the equity ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Dec 20, 2008, 7:36am   #1
Joined Jul 2008
Start trading career as an equity option trader?

Hi all,

What are the skillsets that will be developed from starting my career as a trader on the equity option trading floor in a bank?

And what are the exit opportunities in the future for further career developments?

I aspire to be a successful hedgefund manager/owner in the future.

Are there any star hedgefund managers that are from equity option/derivative background?

I have heard that star hedgefund managers/owners come from the following backgrounds:
(1) Stock picking & timing;
(2) Commodities;
(3) Fixed income markets;
(4) Quant & high frequency algorithm programing trading;
(5) M&A, corporate finance and distressed.

I cannot seem to find star hedgefund managers/owners who started from equity (index) option traders...

I am wondering if those skills such as greeks, straddles, etc. are useful for building my own fund successfully.

I am weighing between the career as being a sell-side equity option trader vs. a (high frequency) quant trading strategy analyst in a top 10-20 quant hedgefund (I enjoy equally both C++/Java programming, as well as econ/finance and math/stochastics).

Any thoughts? Thanks!
mizhael is offline   Reply With Quote
Old Dec 20, 2008, 11:20am   #2
Joined Sep 2008
There is no "right" path to take if you want to realise your goal of running your own hedge fund. The qualities you need are committment, contacts and luck, not necessarily in that order.

I would suggest to anyone just starting out to try and take a job in a large investment bank. I joined a good graduate program after leaving university and spent my time in the bank learning how finance works, who the customers are and what motivates them. It's also an invaluable time to make good contacts, most of the people working on the trading floors in the big banks are very wealthy (or know very welathy people) and they are exactly the kind of backers you need if you manage to get as far as launching a fund.

Ultimately, I would highly recommend taking the investment bank path, but dont concern yourself too much at this stage with the technicalities of the role but use the experience to learn as much as you can and meet the right people.
adamscj is offline   Reply With Quote
Old Dec 20, 2008, 5:01pm   #3
Joined Jul 2008
mizhael started this thread
Quote:
Originally Posted by adamscj View Post
There is no "right" path to take if you want to realise your goal of running your own hedge fund. The qualities you need are committment, contacts and luck, not necessarily in that order.

I would suggest to anyone just starting out to try and take a job in a large investment bank. I joined a good graduate program after leaving university and spent my time in the bank learning how finance works, who the customers are and what motivates them. It's also an invaluable time to make good contacts, most of the people working on the trading floors in the big banks are very wealthy (or know very welathy people) and they are exactly the kind of backers you need if you manage to get as far as launching a fund.

Ultimately, I would highly recommend taking the investment bank path, but dont concern yourself too much at this stage with the technicalities of the role but use the experience to learn as much as you can and meet the right people.
It's great to hear from some one who had experience with the IBanks. Thank you oadamscj. In the past two summers, I worked on trading floor at a reputable IBank, and got the same feeling as yours. So you are saying that I should take the option trader position to start my career, and say bye to Citadel and DEShaw, etc.? How about a quant role at Goldman Sachs or Morgan Stanley as a career start?

You mentioned about "committment, contacts and luck", I am a bit surprised that you didn't even mention about investment skill and market sense. Could you please elaborate here?

Thanks again for your advice!
mizhael is offline   Reply With Quote
Old Dec 20, 2008, 5:12pm   #4
Joined Sep 2008
Obviously things are a little different at the investment banks at the moment and may take some time to settle down, but in general companies like GS and MS offer an interesting and challenging career. I would definitely go for them over the like of DE Shaw etc - I'm not sure how old you are or what your educational background is, but I would strongly recommend trying to get on a graduate scheme at one of the above if you can.

As for your ultimate aim, I wouldn't worry too much about strategies at the moment. Ask anyone on these boards and I'm sure they would have gone through 50 different strategies before they found one that they are hapyp with (if at all!). Just try and use your work experience wisely, make friends with smart people and use them to bounce ideas off.

The truth about the investment industry is that very few strategies actually work. So either you find one that does work and copy it, or you find one that suits the current environment and make your money while it works. As an example, look at the likes of Citadel or Renaissance - people thought they had some magic strategy that could do no wrong, but are now some of the biggest losers of 2008. Essentially they were not different to the rest - just had an idea that worked over certain type of market. Fair play to them though - they made themselves very rich in the meantime and now it's the clients picking up the bill, not them.
adamscj is offline   Reply With Quote
Old Dec 20, 2008, 5:47pm   #5
Joined Jul 2008
mizhael started this thread
Quote:
Originally Posted by adamscj View Post
Obviously things are a little different at the investment banks at the moment and may take some time to settle down, but in general companies like GS and MS offer an interesting and challenging career. I would definitely go for them over the like of DE Shaw etc - I'm not sure how old you are or what your educational background is, but I would strongly recommend trying to get on a graduate scheme at one of the above if you can.
Hi Adamscj,

Thanks a lot for your advice.

You think a quant's job at GS/MS is better than DEShaw? GS/MS's quant positions are mostly pricing exotics, etc. No much about trading strategies... I am not sure if the skill sets will seamlessly transit to a successful fund manager's toolkits in the future...

Quote:
Originally Posted by adamscj View Post
As for your ultimate aim, I wouldn't worry too much about strategies at the moment. Ask anyone on these boards and I'm sure they would have gone through 50 different strategies before they found one that they are hapyp with (if at all!). Just try and use your work experience wisely, make friends with smart people and use them to bounce ideas off.
Very good idea thank you!

Quote:
Originally Posted by adamscj View Post
The truth about the investment industry is that very few strategies actually work. So either you find one that does work and copy it, or you find one that suits the current environment and make your money while it works. As an example, look at the likes of Citadel or Renaissance - people thought they had some magic strategy that could do no wrong, but are now some of the biggest losers of 2008. Essentially they were not different to the rest - just had an idea that worked over certain type of market. Fair play to them though - they made themselves very rich in the meantime and now it's the clients picking up the bill, not them.
What happened to Renaissance and Citadel and DEShaw this year?

Any details? :=)
mizhael is offline   Reply With Quote
Old Dec 20, 2008, 6:08pm   #6
Joined Sep 2008
You can search on Bloomberg for reported losses, but as an example Citadel have closed at least 2 funds this year after losing over 50% of investors money.

The point I was trying to make is nbot to get too obsessed with your strategy just yet, there is no "secret formula" out there.
adamscj is offline   Reply With Quote
Old Dec 20, 2008, 7:00pm   #7
Joined Jul 2008
mizhael started this thread
Quote:
Originally Posted by adamscj View Post
You can search on Bloomberg for reported losses, but as an example Citadel have closed at least 2 funds this year after losing over 50% of investors money.

The point I was trying to make is nbot to get too obsessed with your strategy just yet, there is no "secret formula" out there.
I heard that's largely due to the two short bans, which affected their convertible bond fund severely... and of course, their distressed fund is also under water due to temporary mark-to-market loss. So these are temporary conditions and setbacks, aren't they?

Am I right?
mizhael is offline   Reply With Quote
Old Dec 20, 2008, 7:08pm   #8
Joined Sep 2008
Quote:
Originally Posted by mizhael View Post
I heard that's largely due to the two short bans, which affected their convertible bond fund severely... and of course, their distressed fund is also under water due to temporary mark-to-market loss. So these are temporary conditions and setbacks, aren't they?

Am I right?
The problem for them (and other hedge funds) is whether they can prevent clients withdrawing money long enough to wait for the recovery. How confident are you that these conditions are "temporary"? And are you thinking weeks, months, years? I dont think anyone would be happy to predict a recovery at the moment. I expect a lot of funds have a window at year end for redemptions so lets see how they are looking in January. Remember, for these guys a fund or strategy that makes money is secondary, they primary business is in attracting capital, on which they can earn management fees (and yes, sure, a winning strategy helps this).
adamscj is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Aspiring trader career advice needed zuidie Home Trader 12 Aug 15, 2011 8:40pm
Is it too late for me to start a career in trading? aqueoushumour01 Home Trader 7 Dec 12, 2008 12:43am
From The Start Of My Trading Career. themadride Trading Journals 16 Nov 17, 2008 3:11am
PartyGaming - how NOT to start your trading career ! kkarank First Steps 20 Dec 21, 2006 11:01pm
Equity Option Traders, Help! Gabe Futures & Options 3 Nov 9, 2006 9:01am

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)