What is the day of an options trader like?

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foolishdead

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Hi everyone!

I'm currently considering a career as an options trader at a trading firm. I passed the tests and got a phone interview which went well but the interviewer asked me a question that I think requires some thought: "Do you really know the specifics of options trading?"

I know what options are, how to price them and I'm aware of the different trading strategies involved with options trading but I realize that I don't really know what a day in the life of an options trader is like... which forced me to dodge the question the interviewer asked me :whistling

Could you enlighten me on what an options trader has to do (analyzing options prices, establishing trading strategies...) knowing that I applied to a prop-firm that is a market-maker?

Also, that last sentence brings me to ask another question: how can a trading firm be proprietary and market-maker at the same time knowing that a prop-firm usually involves high risk trading and market-maker is supposed to be the opposite?

Thanks a lot :cheesy:
 
arright yeah i guess there's some "button clickin" like you say but do you actually have your say in the strategies used or are they imposed to you. As for the analyzes, do you do them yourself? I'm applying for a junior trader strategist position so I guess I'll have to do some analyzes for the "real"traders...
 
Are you planning to be an options market-maker or an end-user? Your daily activities might very much depend on which side you're on.
 
Beat me to it Martin. But it's definitely the question that needs answering before we proceed.
 
I'd be working for a market-maker firm but as I said they're a prop-firm as well (i don't really understand how they can be both...). To make things clearer I applied to IMC.
 
I've read that already but it doesn't really give the specifics. What I wanna know is what kind of work is required of an options trader. I had to take a bunch of numerical tests so I guess I'm going to have to make calculations of some sort and not just rely on the trading system set up by the quants...
I'm going to try to ask more specific questions to guide the conversation:
Does an options trader has to do economic analysis?
risk analysis?
options pricing?
And what takes up the biggest part of a trader's day?

The reason I ask this is that there are multiple departments in the firm. There's a risk management department, a quant department, a financial management department...

So what's left for the trader except "clickin the buttons"?

Oh and last but not least... how is it possible for a trading firm to be both a prop AND a market maker firm???
 
I've read that already but it doesn't really give the specifics of what an options trader does.
What I wanna know is what kind of work is required of a trader.
Does an options trader has to do economic analysis?
risk analysis?
options pricing?
I ask those questions because there are different departments within the firm. There's a department specifically for risk management, a quants department, a financial department...
So what's left for the trader except "clicking on the buttons"?

Also, what task takes up the biggest part of a trader's day?

And last but not least, how is it possible for a firm to be both prop and market maker???
 
foolishdead said:
I've read that already but it doesn't really give the specifics of what an options trader does.
What I wanna know is what kind of work is required of a trader.
Does an options trader has to do economic analysis?
risk analysis?
options pricing?
I ask those questions because there are different departments within the firm. There's a department specifically for risk management, a quants department, a financial department...
So what's left for the trader except "clicking on the buttons"?

Also, what task takes up the biggest part of a trader's day?

And last but not least, how is it possible for a firm to be both prop and market maker???
Click to expand...

Primarily if you are working for an options trader then you will mostly be making markets for clients ie providing liquidity, quoting bids, offers etc, and then executing the trades against what you would already have in your "inventory"

As for the different deparments this is like anywhere for example risk wise a trader should indivdually be monitoring the risk of the portfolio and trades they hold but as always companies are always going to have a seperate department to be looking into the individual risk in a lot more detail so no mistakes can happen.

Lastly as for the prop and market making its simple they have traders who make markets and then a sperate group of traders who just trade prop ideas, maybe even traders who do both
 
There's still something bothering me though... you talk about market making for clients, and i totally agree market making should involve clients or else who would you provide liquidity to... but IMC's website states "Broadly, our main strategies can be grouped into:

*Market Making or Liquidity providing
*Algorithmic arbitrage
*Statistical arbitrage
All strategies are proprietary, meaning that all risks and benefits are for IMC and we do not have any clients. All strategies have a short-term horizon and are considered as ‘high frequency trading’. "
 
foolishdead said:
There's still something bothering me though... you talk about market making for clients, and i totally agree market making should involve clients or else who would you provide liquidity to... but IMC's website states "Broadly, our main strategies can be grouped into:

*Market Making or Liquidity providing
*Algorithmic arbitrage
*Statistical arbitrage
All strategies are proprietary, meaning that all risks and benefits are for IMC and we do not have any clients. All strategies have a short-term horizon and are considered as ‘high frequency trading’. "
Click to expand...

When they say all strategies are proprietary and they have no clients I am guessing they mean along the lines of what they trade with is purely the companies funding, they dont take and trade money for clients. So they don't mean along the lines that they dont work with clients for market making (because obviously thats the whole point of liquidity provision) they just purely mean when it comes to investing they dont take on funding from clients.
 
Okkkkkkk great!!! That makes sense, i finally understand what they're all about.
Thank you so much :cheesy::cheesy:
 
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