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.

5. 096What did you learn from that experience that you hadn't expected to learn?FitIntermediatesuperdayJane StreetSales and Trading · London · 2026

   Say this

   Answer with something that genuinely surprised you, which means it should be slightly unflattering. The word 'unexpected' is the whole question — if your lesson is the one anyone would predict from the story, you have not answered it. The good version is a belief you held that turned out to be wrong.

   Then walk it

   1. The structure: here is what I expected going in, here is what actually happened, here is the belief I had to revise. Three beats, and the third one is the answer.
   2. Make the revised belief specific and about you. 'I expected the hard part to be the modelling and it turned out to be getting three people to agree on the assumptions' is a real lesson. 'I learned the importance of teamwork' is not.
   3. It is stronger when it is mildly unflattering, because that is what makes it credible as a surprise. Somewhere like Jane Street is explicitly testing intellectual honesty and the ability to update, which is the same trait as cutting a losing position.
   4. Then say what you did differently afterwards, concretely. An unexamined lesson is not a lesson. 'So on the next project I wrote the assumptions down and got them signed off before I built anything' closes the loop.
   5. Then, if it fits, name what you still find hard about it. Saying 'I am better at this than I was and still not good at it' is disarming and almost always true.
   6. And avoid the two failure modes: a rehearsed lesson that any story would produce, and a humblebrag where the surprise is that you were even better than you thought. Both tell the interviewer you are performing rather than thinking.

   Where candidates lose it

   Giving the predictable moral of the story. The word 'unexpected' means the lesson must be one you could not have guessed at the start, which almost always means it involves you being wrong about something. A generic teamwork or time-management lesson is a non-answer here.

   Expect next

   • What did you do differently after that?
   • What do you still find hard about it?
   • Tell me about a time you changed your mind about something important.

   Reported by candidates at Jane Street (Sales and Trading, London, 2026). Source: Wall Street Oasis.

6. 097What would you do if you get the offer?FitIntermediatesuperdayBarclaysSales and Trading · New York · 2026

   Say this

   Be straight about it. If this is your first choice, say so plainly and say why in one specific sentence. If you have other processes running, say that too and give your actual timeline. The question is a sincerity test, and an obviously over-eager answer fails it as badly as an evasive one.

   Then walk it

   1. If it is your first choice: say 'I would accept', then one concrete reason that could not apply to any other bank — a desk, a product franchise, a person you met in the process and what they said. Vague enthusiasm reads as a line.
   2. If you have a competing process: say so, name your timeline honestly, and say what would make the decision. Recruiters talk to each other and they can usually tell. Being caught in an easy lie costs you the offer.
   3. Do not negotiate here. This is not the compensation conversation, and treating it as one before an offer exists reads badly.
   4. It is also a legitimate moment to ask one good question back, because the answer changes your decision: which desk would I sit on, how does the rotation work, and who decides placement. That turns the exchange into a real conversation.
   5. The subtext is retention. Graduate programmes lose people to other offers and to the buy side, and they are trying to gauge how likely you are to be there in two years. Speaking about the medium term concretely — the product you want to learn, why that takes years rather than months — addresses that directly.
   6. And the thing that actually convinces: knowing something specific about their business. If you can say which of their desks you want and why, and reference something real about the franchise, the sincerity question answers itself without you having to protest.

   Where candidates lose it

   Over-promising with 'I would sign immediately, this is my dream job' when you have three other processes running. Interviewers ask this exact question to test candour, and they hear the rehearsed version all day. State your real position, including a competing offer if you have one, and be specific about why their business.

   Expect next

   • Where else are you interviewing, and how do we compare?
   • Which desk would you want, and what if you were placed elsewhere?
   • Where do you see yourself in three years?

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

7. 099Tell me about a time a position or a piece of work went badly against you.FitIntermediatesuperdayProp trading firmsSell-side sales and trading

   Say this

   Pick a real loss, state the size, and be specific about what your process got wrong rather than what the market did. The structure is: here was the thesis, here is what happened, here is the error in my process, here is what I changed. The error should be yours, not the market's.

   Then walk it

   1. Give a real example with numbers, even if small. 'I was long a position that was 30 percent of my account and it fell 40 percent' is credible. A vague story about a group project that got tight on time is not what is being asked on a trading desk.
   2. Separate the two failures explicitly: was the thesis wrong, or was the sizing and risk management wrong? Those have different fixes, and the ability to distinguish them is the actual skill being tested.
   3. Name the process error. Common honest ones: I sized to conviction rather than to the loss I could tolerate, I had no pre-defined exit so I kept renegotiating with myself, I added to a loser to improve my average, I confused a liquidity problem with a value opportunity.
   4. Then the change, concretely. A written thesis with a falsifier before entry, a maximum position size rule, a stop defined in advance, or a journal reviewed weekly. Say the rule you now follow and whether you have had to use it.
   5. Then the part that most candidates skip: what you did in the moment. Did you tell someone, cut, hedge, or freeze? Freezing is the honest answer for most people the first time, and saying so is far more convincing than a story where you acted perfectly.
   6. And no self-serving framing. Not 'the thesis was right, the timing was wrong' — that is the most common self-deception in the industry, and a trader hearing it will assume you have not actually learned anything. If the position was closed at a loss, the trade was wrong.

   Where candidates lose it

   Blaming the market, or the 'right thesis, wrong timing' framing. On a trading desk that phrase is a red flag, because it means you have preserved the belief that lost the money. Own a process error, name the rule you changed, and say honestly what you did in the moment.

   Expect next

   • Was the thesis wrong or was the sizing wrong?
   • What rule did you put in place, and have you had to use it?
   • What did you do in the hour after you realised?
8. 100What do you think makes a good derivatives trader, and which part of it would you be worst at?FitHardsuperdayProp trading firmsMarket making

   Say this

   Three things: being able to hold two probabilities at once — your view and your confidence in it — being ruthless about size, and being genuinely comfortable being wrong in public. The maths is table stakes. The part I would be worst at is cutting a position I still believe in, and I would rather say that than pretend the weakness is something cosmetic.

   Then walk it

   1. First trait: calibration, not conviction. A good trader can say 'I think this is 60-40 and here is what would move it to 40-60'. The failure mode is a strong view with no sense of how strong it should be, which is how positions get oversized.
   2. Second: discipline about size. Almost every blow-up is a sizing failure rather than an analysis failure, and the traders who last size to survive being wrong rather than to maximise being right.
   3. Third: an unusual relationship with error. In this job you are publicly wrong several times a week, and the people who do well treat a loss as information rather than as an identity problem. That is a temperament, and it is more scarce than quantitative ability.
   4. Fourth, specific to derivatives: comfort with multidimensional risk. You can be right on direction and lose on volatility, right on volatility and lose on timing. That means being able to say precisely which of your views the position actually expresses.
   5. Then the weakness, stated as something real with a mitigation. 'I am slow to cut a position I still believe in, so I now write my exit level and my falsifier down before I enter, and I have a rule that I do not average down.' A named weakness with a named control is credible. A fake weakness is not.
   6. And I would say what I do not yet know, because a junior claiming to have this figured out is the least convincing possible answer. I have not run risk through a genuine dislocation, and the honest thing is that nobody knows how they behave in one until it happens.

   Where candidates lose it

   Naming traits that describe you conveniently, then giving a fake weakness like 'I care too much' or 'I work too hard'. The second half of the question is the whole test. Name a real weakness, name the control you put on it, and admit what you have not been tested on yet.

   Expect next

   • What is the control you use for that, and does it work?
   • Have you ever had to hold risk through something that scared you?
   • What would make you leave this job in three years?

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.