61–70 of 89 posts
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What is being meant by exotics in this discussion?
I assume exotic derivatives (binary, asian, barrier options...) and structured notes that predominantly use above said derivatives (autocallables, barrier reverse convertibles, accumulators etc.)
No matter how much I try to understand the financial system, there seems no end to the nomenclature.
Do you or others know of any good references that help navigate this?
I wonder how fun being a modern quant really is. It seems like one of those things that sounds more fun in your head, but the reality is different. Kinda like "studying physics", going pro in a sport, or becoming a rockstar. People see the end result and don't see how much work it takes to get there or what the day to day is really like
and I wonder how much of your success / failure is luck vs advanced-anything. You could wager 7-figure bankrolls in vegas on blackjack or baccarat and _possibly_ double or triple it. Doesn't mean your equation-solving had anything to do with it (in fact it expressly doesn't in that case).
- a casino is a random game
- stock market is a game of incomplete informatoin
The one cant related to the other by whatever equation.
(2007) MUCH has changed since then.
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This isn’t really a good angle to critique finance IMO, because it is indeed a necessary part of the modern economy. A better angle is how finance tends to acquire a ton of smart young people that could/would otherwise be doing work that has more benefits to society. It’s hard to blame the individual here, because the salaries are orders of magnitude larger in finance vs. say, aerospace engineering. Would I turn down…
"it's all just numbers really. Just changing what you're adding up. And, to speak freely, the money here is considerably more attractive." - Peter Sullivan in the movie Margin Call
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Everyone benefits with more efficient markets. It is easy to fall into the trap of thinking HFT/low frequency quant firms "leech wealth". You can get out of the trap by learning about what they do and the essential role they play in the proper functioning of our markets.
It's an intentionally naive position to say that places don't leech off of others. Even large places like Fidelity and Schwab that respect customers aren't just keeping people's money in vaults. They literally take your checking, savings, retirement accounts, etc. and make money off of them while they "sit". Firms specialize in intercepting trades and then placing trades faster than 99.9% of others. These institution…
Earlier quoted context omitted.
I assume exotic derivatives (binary, asian, barrier options...) and structured notes that predominantly use above said derivatives (autocallables, barrier reverse convertibles, accumulators etc.)
Thank you. No matter how much I try to understand the financial system, there seems no end to the nomenclature. Do you or others know of any good references that help navigate this?
Not sure how exotic he gets but likely the page that sells this book will have other options books.
I think there's one by Espen Hauge about exotics.
Relevant book by Nassim Taleb (before his big break) is Dynamic Hedging, which tells you what to do with your option risk once you have it.
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I started my career in derivatives. Mostly vanilla, but I did have a look in the exotics. Intellectually, it's interesting when you start. There's all these weird payoffs that you are introduced to, and it feels like a game. The thing is, there's a limit to how exotic things can get. People have already figured out how to price most of the things you can imagine, including all the things that customers normally ask f…
The salesman can't tell you how to hedge the product. If you can't hedge you will lose that 5% upfront pretty fast. You need quants and sales and trading. Which is why all banks have all three.
> You need quants and sales and trading. Which is why all banks have all three.
I don't think anybody said you can just run without one of those. But it seems the magic is in spotting the fish, not hauling it in.
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It's an intentionally naive position to say that places don't leech off of others. Even large places like Fidelity and Schwab that respect customers aren't just keeping people's money in vaults. They literally take your checking, savings, retirement accounts, etc. and make money off of them while they "sit". Firms specialize in intercepting trades and then placing trades faster than 99.9% of others. These institution…
> aren't just keeping people's money in vaults. They literally take your checking, savings, retirement accounts, etc. and make money off of them while they "sit". depending on jurisdiction and TOS, this maybe legal, but it needs to be announced somehow to the customer; a capital management firm of an ETF needs to buy the included shares, e.g; those have no money "sitting around"?
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I assume exotic derivatives (binary, asian, barrier options...) and structured notes that predominantly use above said derivatives (autocallables, barrier reverse convertibles, accumulators etc.)
Thank you. No matter how much I try to understand the financial system, there seems no end to the nomenclature. Do you or others know of any good references that help navigate this?
For a structured products introduction you may take a look at this one: https://sspa.ch/en/book/
It's a very simple book, very high level, but explains the most popular structured products in a very simple manner. If you can read a payoff diagram, then this is the simplest intro.
Looking at their website though, they seem to have some nice online material there also. For example this explains the 5 most popular products, and perhaps that's good enough for an introduction (really these 5 products cover 90% of the market anyway, though there's no limit to how exotic some bespoke structures can get): https://sspa.ch/en/lab/?underlying=CH0012221716&final_fixing...
In case you're interested in getting to get to learn about them on a deeper level I would recommend https://www.amazon.com/Exotic-Options-Hybrids-Structuring-Pr.... This book explains not only the products, but also the pricing dynamics and hedging too.
And just a small gem I found recently about volatility trading:https://www.ebay.co.uk/itm/306680584072?chn=ps&_ul=GB&_trkpa...
Despite its appalling Amazon reviews I consider this book to be a real gem when it comes to the introduction to vol trading (basically dynamic hedging of equity derivatives)
A) A finance or STEM student at a fairly prestigious university, close to a major financial hub.
B) Belong to a certain social class where high finance is a known and respected field.
Of course, it has become more mainstream - simply due to the high comp, and high comp jobs eventually finding their way to lists with mainstream audience.