Find an edge. Neutralize risk. Wait for options to revalue. Close position and take the profit. That's how I would answer. It's not how I trade. If he asks how to find the edge, then it gets messy. Mark
Until one day something wild & unexpected happens & the underlying goes nuts in one direction or another. At which point, game over.
I've already read the replies from many of the guys who were in the business and who have an opinion. Here is a different take from someone who wasn't in the business: I would not hesitate to say that "I'm going to focus on understanding and managing risk while learning to make profits for your firm. And then after I learn how to do that, I'm going to fire your ass and become an independent trader." Regards, Mech
imo, a problem for directional (or whatever) approach is how many different ways individually against various risk profiles and time frames! And which ones will be chosen as preferred ways! Probably the best answer would be hopefully, if lucky, forming a good fit with minimum correlation to their existing directional traders, obviously.
A tech job in options-MM is what I used to have and it's really not that great a job. I wouldn't be surprised if you were interviewing for my old job. I would've just said, "Get a job with an options MM firm, steal their edge, raise capital, and do it somewhere else." It's not like these people invented all the technology behind their pricing systems. They need to get off their high horse and STFU. And these BS questions are usually just to test whether you're a weasely shit or someone who can deal with the office politics. Honestly, traders want people they can push around -- not people they will/can educate. If you're assertive, you would've questioned him for details and pushed him into revealing the answer, because that's how it works on a trading floor. You can't read his mind, so question the bastard. I'm tired of tech people getting pushed around like this trying to break into the trader role. Stop kissing these people's asses or trying to please them. You tell him you want 200k minimum with a 50k minimum base bonus and THEN you'll tell his ass how to make money in options, because that's when it becomes worth your while to conduct the search. F these people. And I bet your base pay would've been like $150k to maybe 175k. At the end of it all, you would have been writing bullshit perl scripts to pull down reports from the exchanges after all the non-sense.
You should've told him you get inside info, buy options at the optimum strike price and profit. That is what options are designed for anyway, to make insider trading more profitable. Then you would have gotten the job.
I dunno, I wouldn't write yourself off just yet. If this is a tech support position I doubt they're looking for option trading gurus. I did a few seminars once at an options prop house for the support people; basically what they wanted was for the techs to be conversant enough in options that they could speak the same language as the traders, so they could understand the traders' requests and develop what they wanted. I'm sure the guy you talked to couldn't care less about "strategies" such as butterflies and call spreads, but by talking about gamma scalping at least you probably showed him you have a better command of options than your average techie.