Interview question: how do you make money with options?

Discussion in 'Options' started by newguy05, Jun 15, 2009.

  1. nitro

    nitro

    "I could tell you, but then I would have to kill you"
     
    #21     Jun 16, 2009
  2. Johno

    Johno

    Come on mate, just make it a virtual death!

    Regards

    Johno
     
    #22     Jun 16, 2009
  3. nitro

    nitro

    Ahahahaha :D

    I seriously would have said that, in jest of course. I would have hit this question out of the ballpark though. The only thing that would have been really tough would have been: You have access to $5B. How would you make money in options trading this amount of size? That would have shut me up cold.
     
    #23     Jun 16, 2009
  4. Johno

    Johno

    Me too, that's why I'm certainly not going to answer the question !

    Regards

    Johno
     
    #24     Jun 16, 2009
  5. some interesting insights you posted.....any other reasons why tech jobs at options-MM firms suck? Is it just tech jobs at options-MM firms, or tech jobs at all financial institutions suck?
     
    #25     Jun 16, 2009
  6. Because tech work in finance, for most people, is not as intellectually engaging as the firms make it out to be. They'll make you go through a 3 hour interview uncompensated. When you "win", you still get a boring job. It is -extremely- difficult to get into a position (from the tech side) where your opinion on making money counts.

    Even when I worked on the business side, the flow of information doesn't quite get given to technical people that readily. You have to be aggressive. Tech people really need to learn the business, not get caught up doing maintenance work on poorly written C++.
     
    #26     Jun 16, 2009
  7. I don't think he expected a definitive answer since there is none.

    I might have said "you have to predict the movement of the underlying"

    If he asked how do you do that, I probably would have said, "most people use technical analysis or fundamental analysis".

    If he pressed further at some point I would've said: "honestly, if I really knew that answer I wouldn't be applying for a tech job".

    IMHO, most of the time upper management is trying to judge who you are. If you communicate effectively (probably with short answers) and honestly your chances are improved.

    Follow up with a short letter thanking them for the interview and telling them how you can solve their problem.

    Don
     
    #27     Jun 16, 2009
  8. +1

    Option market-making is the safest way to go IMO
     
    #28     Jun 16, 2009
  9. Agassi

    Agassi

    What exactly is "market making"? I know the basic idea...10 years ago, i had interviewed with spear leeds kellogg which was a market making firm. In stocks, u have the big i-banks as "market makers". My question is, can a retail individual be a market maker? that too in options? can u become a market maker? if so? how? do u have to buy a seat or lease a seat on an exchange?

    My understanding of market making is that u have all the orders come to u and u match it all. say some one wants to buy x at 100, then as a market maker, u would buy the same instrument from some one else at 99 or lower price and immediately sell it at 100. This in a very basic beginner sense.

    is my understanding correct? also i know as a market maker u need to make markets. can u elaborate on details? how can joe sitting in home become a market maker in options? in stocks?
     
    #29     Jun 16, 2009
  10. Risk Merchant is correct. This is the best answer and here is why:

    There is never a 100% perfect answer to such a theoretical question such as “how do you make money with xyz”, but when it comes to options trading, it’s better to be on the sell side then the buy side because 1) options are wasting assets (time is against the buyer) and 2) more than 90% of open interest expires worthless every month.
     
    #30     Jun 16, 2009