Average day of a pro options trader

Discussion in 'Professional Trading' started by DarkProtoman, Apr 1, 2009.

  1. What's the average day of a professional options trader (working for a prop firm, hedge fund, or bank)?

    I suppose for the first hour and half you do research, then you discuss strategy w/ your coworkers for the next hour and a half, then you trade until the markets close, then you review your trades and make strategy adjustments.

    And is the job description of a professional options trader this: continuously quote bids and asks, develop and implement automated trading algorithms?
  2. I'm not a pro options trader, but I work for a pro options trading group. Most of what you say sounds right, except we end up starting work 2 hours before the open. Trading happens mostly automatic, but there's always one or two traders keeping an eye on the system. Discussions are had with coworkers whenever they think there's a problem with the model or the system.

    Group generally breaks down into development team, quantitative team, and a trading team. Traders don't actually do all that much, except direct the other two groups to their satisfaction. Quantitative team has the most input on trading, and the developers are just slaves who hope for a bonus at the end of the year after all their dicking around with the exchanges and their shitty documentation or the anger of traders.
  3. MTE


    It's hard to average it. What a market maker does may be completely different from what a hedge fund trader does, as their goals may not be the same.

    The description you post sounds like a market maker job.
  4. cvds16


    When I was a market maker (which was 10 years ago), I tried to get in like 5 min before the opening and then stayed glued to my screen for the next 8 hours or so just quoting everywhere and hedging. Their wasn't much analysis involved but just tried to gauge the evolution of vol to adjust prices. It was intense and took a lot of concentration because quotes were mainly manually put into the computer at at that time. It wouldn't have been the first that you saw a bunch of trades flashing up and you heard cursing because someone had put a bunch of quotes in the wrong lines. Only if you were lucky and had a cooporative counterparty they would get undone, because most of the time these trades weren't really outsade exchange rules, some people refused however.
  5. So, what would an entry-level trader for a "true" proprietary trading group, lke Wolverine Trading, do? Market making?

    Do market makers like selling options (and dynamically hedging them, of course) right before earnings announcements, to profit from the drop in IV?

    Does the hedging of option market makers contribute to liquidity in the equities markets?
  6. MTE


    Get coffee for experienced traders.

    (Sorry couldn't resist)
  7. Yes, I suppose :) But they obviously have real work to do. I guess they assist the senior traders in market research, developing and implementing automated strategies, etc.
  8. Considering the greeks, how do you automate options trades and get decent fills?

  9. I suppose it involves solving the Black-Scholes eqn for the greeks, and making trades based on those.
  10. cvds16


    market makers are price makers not price takers. And don't get fooled all too much by all the hype, most market making isn't rocket science, it's just trading and keeping inventory in check and if not adjusting your prices to get your greeks/inventory better positioned. Anybody who is fast thinker, with decent brain and a lot of common sense can learn how to make markets in options. But you're gonna have to really spend some time to get to know the in and outs. It's basically that, spending a lot of time to learn it, it ain't that difficult.
    #10     Apr 1, 2009