Quant interview preparation

Questions

100

Traced to a firm

53

Firms

15

Updated

September 2026

Asked at

All firmsOld Mission Capital12Tower Research Capital10Jump Trading7Akuna Capital5Citadel4DED.E. Shaw3Jane Street3ACAQR Capital Management2DRW2Millennium Management2Schonfeld2SCSquarepoint Capital2Susquehanna International Group2Belvedere Trading1Optiver1

Topic

All topicsProbability10Coins, cards and games6Expected value8Statistics11Market making15Estimation and mental maths4Stochastic processes4Regression5Machine learning6Time series6Programming10Options and derivatives8Fit and motivation7

Level

AnyCoreIntermediateHard

Type

AnyBrainteaserTechnicalCaseMarket viewFit

1. 089What is put-call parity, and what would you do if you saw it violated?Options and derivativesIntermediatetechnicalProp trading firmsDerivatives

   Say this

   For European options on a non-dividend-paying stock, call minus put equals spot minus the discounted strike. It is pure arbitrage, no model, because a long call plus a short put plus the discounted strike in cash replicates the stock exactly. If it breaks, you trade both sides and lock a riskless profit.

   Then walk it

   1. The proof is a payoff table. At expiry, long call plus short put pays S minus K in every state, whether S is above or below K. Adding K in cash held to expiry gives you S. So the cost today of call minus put plus K discounted must equal S.
   2. With dividends, subtract the present value of dividends from the spot. With a cost of carry or borrow cost on the short, use the forward: C minus P equals the discounted difference between the forward and the strike.
   3. If I saw a violation, say the call is too expensive: sell the call, buy the put, buy the stock, and borrow the discounted strike. That is a conversion, and the reverse is a reversal. Lock the difference and hold to expiry.
   4. Then the reasons an apparent violation is usually not one, and this is what the question is really testing. Stale quotes on one leg. You are looking at mid prices but must trade at the bid and offer, and the parity gap is usually smaller than the combined spreads. Hard-to-borrow stock making the short leg expensive. American exercise, where early exercise of the put breaks the equality. Discrete dividends you have modelled wrong.
   5. So my actual answer: I would first check whether the apparent edge survives crossing four spreads and paying the borrow. Ninety-nine times out of a hundred it does not, and that is the point of the question. The hundredth time, borrow cost is usually the explanation, and the implied borrow rate you back out of the parity relationship is itself the useful information.

   Where candidates lose it

   Giving the formula and saying you would arbitrage it, with no mention of transaction costs, borrow or American exercise. A trading interviewer asks this specifically to see whether you treat a screen-level inefficiency as free money. Also know that parity holds for European options only, and be able to say why American puts break it.

   Expect next

   • Why does it not hold exactly for American options?
   • How would you back out the implied borrow rate from the option prices?
   • What does a persistent parity gap tell you about the stock?
2. 090What is the difference between implied and realised volatility, and what does the gap between them tell you?Options and derivativesIntermediatetechnicalDerivativesProp trading firms

   Say this

   Implied vol is the market's forward-looking price of volatility, backed out of option prices. Realised vol is a backward-looking statistic computed from returns. Implied sits above realised on average by a few points, and that gap is the variance risk premium, not a free lunch.

   Then walk it

   1. Implied comes from inverting a pricing model on a traded price, so it is a price expressed in volatility units. Realised is the annualised standard deviation of returns over a window, and how you compute it matters: close-to-close, high-low estimators like Parkinson or Garman-Klass, or sums of intraday squared returns.
   2. On the S&P, VIX has historically averaged around 19 to 20 against realised vol nearer 15 to 16. That three to four point gap is persistent and it is compensation to option sellers for taking gap risk and for providing crash insurance.
   3. So the gap does not mean options are overpriced. It means there is a premium for bearing the risk that variance spikes, and that risk is exactly the risk that hurts most when it materialises, since vol spikes coincide with equities falling.
   4. Where the gap becomes information: the term structure, which is normally upward sloping and inverts in a crisis, and the spread between implied and a good realised forecast. If implied is unusually high relative to a GARCH or HAR forecast, that is a candidate signal, but it has to clear the premium first.
   5. And the practical trap to name: implied vol from a monthly option is a forecast of realised vol over the next month, so comparing today's VIX to the last month's realised vol is comparing a forecast to the wrong period. Aligning the horizons correctly makes a lot of apparent signal disappear.

   Where candidates lose it

   Concluding that because implied exceeds realised you should always sell vol. That trade works for years and then loses everything in a week, and interviewers ask it to see whether you know the premium exists for a reason. Also mismatching horizons, which is the technical error that generates fake signals.

   Expect next

   • Why does the variance risk premium exist?
   • How would you actually forecast next month's realised vol?
   • What does an inverted vol term structure tell you?
3. 091You want to express a view that the underlying will move a lot but you have no view on direction. Straddle or strangle?Options and derivativesIntermediatetechnicalProp trading firmsDerivatives

   Say this

   Straddle if I think the move is likely but might be moderate, strangle if I think the move will be large but is less likely. The straddle costs more and starts paying sooner; the strangle is cheaper with a further breakeven and more leverage to a big move.

   Then walk it

   1. Definitions: a straddle is a call and a put at the same strike, usually at the money. A strangle is a call and a put at different out-of-the-money strikes.
   2. Put numbers on it. Stock at 100, one-month at-the-money vol 20 percent, so a monthly standard deviation of about 5.8 percent. The at-the-money straddle costs roughly 0.8 times spot times vol times root T, about 4.6, so breakevens near 95.4 and 104.6. A 95 to 105 strangle might cost 1.8, with breakevens near 93 and 107.
   3. So the straddle needs about a 4.6 percent move to break even and the strangle about 7 percent, but the strangle risks 1.8 rather than 4.6 and pays more per unit risked on a ten percent move.
   4. Greeks tell the same story. The straddle has more gamma and vega per contract and the most theta decay, concentrated near the strike. The strangle has less of everything but a flat maximum loss region, and it gains relatively more from an increase in the wings of the vol surface.
   5. What I would actually decide on, and this is the part interviewers want: whether the implied vol I am paying is cheap relative to my forecast, and where on the smile I am buying it. Out-of-the-money strikes usually carry higher implied vol because of the skew, so the strangle can be the more expensive trade in vol terms even though it is cheaper in premium. If the whole surface is cheap I buy the straddle; if only the wings are cheap I buy the strangle.

   Where candidates lose it

   Answering purely on cost, as if cheaper were better. Compare them on breakeven distance, on cost, and on where you are buying the vol surface. The skew point, that out-of-the-money options often carry higher implied vol, is the answer that shows you think in vol terms rather than premium terms.

   Expect next

   • What if the event has a known date, like earnings?
   • How would the skew change your strike choice?
   • When would you prefer a calendar spread instead?
4. 095What do you like about our culture, and why us rather than another prop shop?Fit and motivationIntermediatetechnicalSusquehanna International GroupProp Trading · Dublin · 2025

   Say this

   Pick two or three things that are specific to them and that you can trace to something you have actually done or want. Generic praise is worse than saying less. And make one of the reasons about the work rather than the perks.

   Then walk it

   1. Do the homework that is actually available. How they train juniors, whether they trade their own capital, which products they are strongest in, whether teams are small and autonomous or large and specialised, and how they talk about decision-making in their own materials.
   2. Then connect it to yourself with evidence. If a firm is known for a structured decision-theory and poker-influenced training culture, say that you have played seriously, what it taught you about sizing and about separating process from outcome, and why you want that as the house language.
   3. Name the products or the seat. Wanting to trade options because you find the surface a genuinely hard pricing problem is a specific, checkable reason. Wanting to be at a firm because it is prestigious is not.
   4. Reference people if you have spoken to them, honestly. What you asked, what surprised you. A single concrete detail from a conversation beats a paragraph of adjectives.
   5. And say one thing you are testing rather than asserting. For example: what I have read suggests decisions are pushed down to small teams, and I want to check whether a first-year really gets to argue with a senior trader about a price. That turns the answer into a two-way conversation, which is what the question is for, and it is much harder to fake than flattery.

   Where candidates lose it

   Praising collaborative culture and meritocracy, which describes every firm's website. Also do not name a culture attribute you cannot connect to your own behaviour. The interviewer is testing whether you would fit and whether you have done any real diligence, so bring two specifics and one genuine question.

   Expect next

   • Who have you spoken to here?
   • What would make you turn down an offer from us?
   • What is your understanding of how we make money?

   Reported by candidates at Susquehanna International Group (Prop Trading, Dublin, 2025). Source: Wall Street Oasis.

5. 098How would you describe the internet to someone who has just time travelled from thirty years ago?Fit and motivationIntermediatetechnicalCitadelQuantitative Trading · Sydney · 2025

   Say this

   Anchor it in something they already have, then build outward. Thirty years ago they had a telephone network and a public library, so I would say: imagine the phone system, but instead of connecting two people it connects every machine, and instead of voices it carries copies of anything written down.

   Then walk it

   1. Start from their reference frame. Someone from the mid-nineties knows telephones, fax machines, libraries, post and television. Every explanation should be a modification of one of those, not a new concept from scratch.
   2. Then the one structural idea that makes everything else follow: the cost of copying and sending information fell to approximately zero, and nobody owns the middle of the network. From that single fact you can derive email, search, shopping, streaming and social media without explaining any of them separately.
   3. Give one concrete, checkable example. The entire contents of that library, searchable in a quarter of a second from a device in your pocket, and it is free because someone sells advertising next to the answer.
   4. Then say what they would find strangest, because that is the interesting part of the answer. Not the technology but the consequences: that attention became the scarce resource, that distance stopped mattering for information but not for goods, and that privacy became something you trade rather than something you have.
   5. Check understanding rather than lecturing. I would ask them what they want to do with it and explain that, because the tailored answer lands and the general one does not. This question is a communication test, so the move that scores is structure plus adapting to the listener, not encyclopaedic completeness.

   Where candidates lose it

   Diving into TCP/IP, packets and DNS. The question tests whether you can teach, not whether you know how it works. Anchor in their existing mental model, lead with one organising idea, and use a concrete example. Rambling without structure is the common failure, so state your three-part plan before you start.

   Expect next

   • Now explain machine learning to the same person.
   • What would they find most surprising about the consequences?
   • Do it in thirty seconds instead.

   Reported by candidates at Citadel (Quantitative Trading, Sydney, 2025). Source: Wall Street Oasis.

6. 099Tell me about a personal investment decision and how you approached it.Fit and motivationIntermediatetechnicalSchonfeldQuantitative Research · New York · 2021

   Say this

   Pick a real decision, however small, and describe the process rather than the outcome: what you believed, why, how you sized it, what would have proved you wrong, and what happened. A modest position analysed honestly beats a large winner you cannot explain.

   Then walk it

   1. State the thesis as it was at the time, not as hindsight has edited it. Include the number: what it traded at, what you thought it was worth, and what the market was apparently assuming that you disagreed with.
   2. Then sizing, which is where most candidates are silent and where a hedge fund is listening hardest. What fraction of your capital, and why that fraction. The answer it was a small position because I might be wrong is fine and honest.
   3. Then the falsification: what would have told you the thesis was breaking, and did you actually watch for it or did you stop looking once you were up.
   4. Then the outcome, separated from the process. It is entirely acceptable to say the thesis was wrong and I made money anyway, or the thesis was right and I lost because I was early. Being able to separate those two is the single most valuable thing you can demonstrate.
   5. Close with what you changed afterwards. A specific process change, like I now write the thesis down before I buy so I cannot rewrite it later, is worth more than any performance claim. And if your investing is simply index funds because you have no edge, say that. It is a defensible and intellectually honest answer, as long as you can explain why you think you have no edge there and would have one in a research seat.

   Where candidates lose it

   Telling a story about a stock that went up and claiming credit for it, or describing crypto gains with no process. They are testing whether you separate skill from luck. Also do not fabricate a sophisticated process. If your real answer is index funds plus one small position you researched properly, say exactly that.

   Expect next

   • How did you size it, and why?
   • What would have made you sell?
   • Was the outcome down to the thesis or to luck?

   Reported by candidates at Schonfeld (Quantitative Research, New York, 2021). Source: Wall Street Oasis.

7. 100You are working through a problem and you cannot finish it. How do you handle that in an interview?Fit and motivationIntermediateevery roundJane StreetEngineering · New York · 2026

   Say this

   Keep talking, and make the thinking visible. How you got there matters more than whether you got there. State what you know, name the structure you are looking for, say what you have ruled out and why, and put a bound on the answer even when you cannot compute it exactly.

   Then walk it

   1. Narrate the state of your reasoning, not just your conclusions. This is what I think the answer depends on, here is the approach I tried, here is why it failed, here is what I would try next. That is a gradeable answer even without a number.
   2. Give a bound or an approximation. The answer is between a half and two thirds, and here is the argument for each side, is worth far more than silence. Traders live on bounds.
   3. Simplify deliberately and say that you are doing it. Do the two-dice version, or the n equals 2 case, or the discrete version of the continuous problem, then say I would extend this by induction. Interviewers will usually let you.
   4. Ask for the hint properly. Not I am stuck, but I think the sticking point is whether these events are independent. Am I right that they are not? That is a precise question and it shows you know where the difficulty lives.
   5. And do not bluff, ever. A confident wrong assertion is far worse than an honest I do not know this result, but here is how I would derive it. On a trading desk, someone who hides uncertainty is dangerous, so the willingness to say I am not sure, with a reason, is itself part of what is being assessed.

   Where candidates lose it

   Going silent while you think, or worse, asserting something you do not believe to fill the gap. Silence gives the interviewer nothing to grade, and bluffing fails the honesty test that every trading firm runs. Narrate, bound the answer, simplify the problem, and ask a precise question when you need one.

   Expect next

   • Tell me about a time you were confidently wrong.
   • How do you decide when to abandon an approach?
   • What would you do if a senior trader gave you a number you thought was wrong?

   Reported by candidates at Jane Street (Engineering, 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.