Derivatives Foundation interview preparation

Questions

100

Traced to a firm

29

Firms

19

Updated

September 2026

Asked at

All firmsMSMorgan Stanley4Nomura4Akuna Capital2Amundi2HSBC2PIMCO2Bank of America1Barclays1Citadel1DRW1Goldman Sachs1Jane Street1Millennium Management1Mizuho1Old Mission Capital1RCRBC Capital Markets1Scotiabank1UBS1Wells Fargo Securities1

Topic

All topicsForwards and futures10Options basics8Option pricing7The Greeks10Volatility7Option strategies9Swaps and rates7Credit derivatives4Market structure and clearing6Indian derivatives8Trading and markets9Brainteasers6Fit9

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseMarket viewBrainteaserFit

1. 092Why derivatives rather than cash equities or another product?FitCorephone / first roundProp trading firmsSell-side sales and trading

   Say this

   Because in derivatives you have to be right about more than direction, and I find that more interesting. A cash trade is a view on a price. A derivative is a view on the price, the path, the volatility and the time, and you can be right about direction and still lose. That structure rewards precision in a way I want to be measured against.

   Then walk it

   1. Lead with the intellectual content, specifically: the payoff is a function rather than a line, so expressing a view means choosing a shape. Deciding between a call spread and a straddle is a more precise act than deciding to buy or sell.
   2. Then the part that is actually true about the job: the risk is multidimensional and it is managed continuously. A delta hedge is a decision you make every day, not a position you take once. That appeals to me more than a research-driven hold.
   3. Then one piece of evidence. Something you have actually done — priced options in a spreadsheet or in Python, run a paper delta-hedging exercise and compared realised profit and loss against implied minus realised, traded a small book, or worked through Natenberg or Hull properly. Name what surprised you when you did it.
   4. Then connect it to their seat rather than to derivatives in general: market making is a different job from structuring, which is different from a rates swaps desk. Say which and why, because 'I like derivatives' is not a career choice.
   5. Then the honest self-assessment, which is what makes it credible: name the part you find hardest. For most people it is holding a losing position to the rules rather than to the feeling, or the fact that the maths is the easy part and the discipline is not.
   6. And keep it short. Ninety seconds. This question is testing whether you know what the job is, not whether you can be enthusiastic about it.

   Where candidates lose it

   Answering with 'I like maths and markets'. Everyone in the room says that. The distinguishing answer names the specific thing derivatives add — you can be right on direction and lose — and backs it with one thing you actually did. Then it names which derivatives seat and why.

   Expect next

   • What is the most interesting thing you learned pricing your first option?
   • Market making or structuring, and why?
   • What part of this job do you think you would be worst at?
2. 093Why sales and trading?FitCorephone / first roundMSMorgan StanleyGlobal Markets · London · 2024

   Say this

   Because the feedback loop is immediate and the scorecard is public. You form a view, you put on risk, and the market tells you within hours whether you were right. I want to be in a seat where the judgement is measured rather than argued about, and where the horizon is short enough to learn quickly.

   Then walk it

   1. Lead with the feedback loop, because that is the genuine structural difference from banking or research: your work is priced continuously and by someone who does not care about your reasoning.
   2. Then the second real difference: markets is a flow business, so the value you add is in pricing, liquidity and relationships, not in a document. Say you prefer being judged on decisions than on deliverables — and mean it, because it also means being wrong in public.
   3. Then be specific about which part of markets, because sales and trading is three jobs. Say whether you are drawn to market making, to a client-facing sales seat, or to a structuring or strat role, and give a reason rooted in something you have done.
   4. Then the evidence. Trading your own account is fine if you talk about process and risk rather than returns. A trading competition, a research project on market microstructure, or a market-making simulation all work. What is being tested is whether you have ever made a decision under uncertainty and reviewed it honestly.
   5. Then acknowledge the cost, because it is a job with real drawbacks: the hours are front-loaded around the open, the electronification of flow means the seat looks different from ten years ago, and a bad run is visible to everyone. Saying you know that is more convincing than enthusiasm.
   6. Close on why this firm's markets business rather than any other. Something concrete about their franchise — a product they are genuinely strong in, the structure of their graduate rotation — not a line from the careers page.

   Where candidates lose it

   Reciting 'fast-paced environment' and 'I love markets'. Both are unfalsifiable. The answer that works names the feedback loop as the reason, picks which of the three sales and trading jobs you want, and gives one piece of evidence with a process described rather than a return quoted.

   Expect next

   • Sales or trading, and why?
   • How has electronification changed the job you are applying for?
   • Tell me about a decision you made under uncertainty and how you reviewed it.

   Reported by candidates at Morgan Stanley (Global Markets, London, 2024). Source: Wall Street Oasis.

3. 094Which divisions sit inside sales and trading, and what does each one do?FitCorephone / first roundMSMorgan StanleyGlobal Markets · London · 2024

   Say this

   Broadly two halves: equities and fixed income, currencies and commodities. Within each you have sales, which covers clients, trading, which prices and warehouses risk, and structuring or strats, which builds the products and models. Then the cross-cutting businesses: prime brokerage, research, and electronic or systematic market making.

   Then walk it

   1. Equities: cash equities, equity derivatives — flow options and structured — delta one and swaps, convertibles, and prime brokerage sitting alongside as the financing business for hedge funds.
   2. FICC: rates, meaning government bonds and swaps; credit, both cash and CDS; foreign exchange, spot, forwards and options; commodities; emerging markets, which is often organised as its own cross-product desk; and securitised products.
   3. The functional split inside each desk: sales owns the client relationship and distributes ideas and axes, trading prices and manages the resulting risk, and structurers and strats build bespoke products and the pricing infrastructure. In electronic businesses the quant developers are effectively the traders.
   4. The distinction worth making, because it shows you understand the modern business: flow trading is a spread and market-share business that is increasingly automated, while structured and exotic trading is about warehousing risk you cannot hedge perfectly. Those are different skills and different career paths.
   5. Then say where you want to sit and why, in one sentence. That converts a list into an answer. 'I want flow equity derivatives because the pricing is quantitative and the client dialogue is real, and I would rather learn in a business with high ticket volume.'
   6. And show you know the boundaries: research is separate and walled from trading, prime brokerage is a financing business not a trading one, and treasury or the XVA desk are internal-facing rather than client-facing. Getting those boundaries right is the detail that signals you actually researched the firm.

   Where candidates lose it

   Giving a vague two-line answer, or naming desks without saying what they actually do. This is a homework question and a wrong answer says you did not do the homework. Finish by naming the desk you want and why, because a list with no preference reads as indifference.

   Expect next

   • Which of those desks do you want, and why?
   • How is flow trading different from exotics?
   • Where does prime brokerage sit and why is it not a trading business?

   Reported by candidates at Morgan Stanley (Global Markets, London, 2024). Source: Wall Street Oasis.

4. 095Tell me about something that is not on your resume.FitCoresuperdayUBSSales and Trading · New York · 2026

   Say this

   Pick one real thing you do outside work that you are genuinely good at, and talk about the part of it that reveals how you think. Not a hobby list — one thing, with enough specificity that it could not be anyone else's answer, and a connection to judgement under uncertainty that you do not have to force.

   Then walk it

   1. Choose something with depth rather than breadth. Competitive chess, cooking seriously, running a small resale business, rebuilding motorcycles, playing in a band, coaching a junior team. Depth in one thing beats a list of five.
   2. Lead with a specific detail rather than a category. 'I have been repairing and reselling film cameras for four years, about 200 of them' tells them something. 'I like photography' tells them nothing.
   3. Then the part that reveals process. What did you get wrong at first, what did you change, and what is the thing you now know that most people doing it do not? That is the same shape as a good trade review.
   4. Connect it lightly, once. If the resale business taught you about pricing and inventory risk, say so in one sentence. Do not construct an elaborate metaphor to trading — the forced version is worse than no connection at all.
   5. Keep it 60 to 90 seconds and leave a hook so they can ask about it. This question exists partly to see whether the interviewer wants to sit next to you for ten hours a day, so being interesting matters more than being impressive.
   6. And the mistake to avoid: do not use it to smuggle in another achievement. If the answer is 'I taught myself Python and built a backtester', that belongs on the resume, and saying it here suggests you either did not hear the question or have nothing outside work.

   Where candidates lose it

   Turning it into another achievement story, or listing hobbies. The question is asked to find a person, and the answer that fails is the one that is still selling. Pick one real thing, give a number or a specific detail, and let it be about you rather than about the job.

   Expect next

   • What did you get wrong when you started?
   • What do you know about that which most people don't?
   • What do you do when you are not working or studying?

   Reported by candidates at UBS (Sales and Trading, New York, 2026). Source: Wall Street Oasis.

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.