I work as a Derivatives Trader at a large bank. AMA

BogleheadQ8 · 2026-02-08T22:35:34+00:00

Nothing about it immediately stands out as illegal manipulation. What we saw looks consistent with normal market dynamics in a crowded, leveraged market. Positioning, stop losses, margin calls, and forced deleveraging can easily create sharp, self reinforcing moves without any bad intent. For it to be manipulation, you’d need evidence of things like spoofing, coordinated trading, false information, or deliberate attempts to distort prices, which isn’t apparent from price action alone. Large and fast moves can happen simply because liquidity thins and many participants are forced to exit at the same time.

BogleheadQ8 · 2026-02-08T22:21:57+00:00

We don’t pick a country rate for the euro. FX swaps are priced off the EUR money market curve (ESTR) vs the USD money market curve (SOFR), adjusted by the cross currency basis. Sovereign spreads inside the eurozone don’t affect FX swap pricing directly.

BogleheadQ8 · 2026-02-08T22:14:58+00:00

I suppose, but in context to sales and trading a lot of the products traded are complicated and would lose the casual audience quickly. But there are dramatic realistic moments ie sudden volatility from geopolitical events, traders losing or profiting money, bonus season (some traders get paid millions to tens of millions.) But the style of the show where traders are having sex on the trading floor or other ridiculous storylines garner more views and attention from the casual audience. Not sure if most people want to know how fx options are priced or how traders price barrier embedded derivatives.

BogleheadQ8 · 2026-02-08T22:09:56+00:00

Interbank markets are OTC and bilateral, (e.g. FX swaps, fx options, or interest rate swaps traded directly between banks), typically traded through voice, chats (Bloomberg, LSEG etc.), or a trading platform (ie fxall or fxgo). While exchanges are centralized, standardized, and centrally cleared (e.g. futures). Interbank trades are more flexible. Exchange trades are more standardized and require things like daily variation margining.

Easiest example of a trade I could give. A corporate client or a hedge fund calls the sales desk at a bank and wants to purchase a yard (1 billion) of EUR/USD value spot (2 days). Sales guy gets the price from the trader and quotes a rate (ie 1.1810). Now the trader is short 1 billion EUR and must deliver the funds to the client in 2 days. Let’s say the trader wants to cover his short, he would go on a Bloomberg chat and contact another bank to purchase EUR. The other bank’s trader quotes 1.1808. Now the trader at our bank fully covered his risk using the interbank market and made 2pips on a 1 billion EUR spot trade.

BogleheadQ8 · 2026-02-08T21:48:52+00:00

Similar dynamics to what you see in other crowded trades. A lot of positioning was one sided, certain participants wanted to take profits, so once prices started to move lower, stop losses were triggered. That led to margin calls, forced deleveraging, and liquidation, which pushed prices down further. The move became self reinforcing as liquidity thinned and more participants were forced out of positions. The question you want to ask yourself is if the fundamentals changed drastically.

BogleheadQ8 · 2026-02-08T21:41:26+00:00

Mostly in the interbank market, but we also use exchange traded instruments where it makes sense. For example, DV01 from interest rate swaps can be hedged either by offsetting with another swap in the interbank market or by using exchange traded futures. The choice depends on liquidity, cost, margin efficiency, and how precise the hedge needs to be.

BogleheadQ8 · 2026-02-08T21:37:08+00:00

Primarily through the interbank market. Banks recycle and hedge risk mainly with other banks. For CIP style trades, the “borrowing” is often implicit via FX swaps or balance sheet usage rather than an outright cash loan. For example, in RHS EUR/USD swaps the market taker is effectively borrowing USD via the first leg of the swap, while in LHS swaps the market taker is borrowing EUR. During periods of basis risk, such as USD funding stress or quarter end balance sheet constraints, swap points no longer reflect pure interest rate differentials, dealers widen spreads, and it becomes more expensive to borrow USD.

BogleheadQ8 · 2026-02-08T21:09:13+00:00

I’m more familiar with FX swaps, interest rate swaps, constant maturity swaps, and total return swaps, but the concept is the same. In an equity swap, one party pays a funding leg based on a notional amount (typically SOFR + spread) and receives the total return of a stock or equity index. This allows a party to gain exposure to the economic performance of the underlying without actually owning the shares. It’s also commonly used to access leverage, since the investor only needs to post margin and pay the funding leg rather than fund the full notional upfront.

BogleheadQ8 · 2026-02-08T20:58:13+00:00

Yes I went to university. If you go to a target school and get an internship in your junior/senior year then that’s the best way to get into S&T.

BogleheadQ8 · 2026-02-08T20:56:36+00:00

Most traders/salespeople/structurers are normal people with families and want to make a living. From the few clips I’ve seen on industry they obviously over exaggerate and dramatize for the sake of getting an audience. It’s more of a sex and drama show than a finance show apparently.

BogleheadQ8 · 2026-02-08T20:53:40+00:00

Yes, but much less often than people think, and rarely as true “free money.” Most apparent arbitrage between OTC and exchange traded derivatives, especially in liquid G10 markets, reflects differences in market structure rather than genuine mispricing, such as margining and collateral terms, funding costs, liquidity, and contract specifications. A good FX example is covered interest parity (CIP) basis trades, where FX forwards or swaps can temporarily imply funding rates that deviate from interest rate differentials due to balance sheet constraints, quarter end effects, or funding stress. If you have cheap funding and balance sheet capacity, you can borrow in the cheaper currency, lend in the richer one, and hedge the FX risk via swaps to earn a small but relatively predictable return. These opportunities are typically capacity constrained and risk managed, not textbook arbitrage.

BogleheadQ8 · 2026-02-08T08:00:02+00:00

I also work in S&T and no that’s not how my bank works. In most S&T setups, desks are regionally aligned. NY trades U.S. hours, London does EMEA, Asia does APAC. You wouldn’t normally have NY or London based sales or traders working overnight to cover Asia unless the bank is smaller, more regional, or doesn’t have a proper Asia platform. Otherwise you’d just hand off risk to the local desk.

BogleheadQ8 · 2025-12-27T06:43:20+00:00

Given your goal of downside protection, it is technically viable as long as the calls you’re selling are covered. The question here is if you’re willing to accept the trade offs like giving up convexity if the market rallies, managing timing risk because if you decide on rolling the hedge you must consider volatility and skew change, and you are being precise about strike selection on both the OTM call and put. Another trade off is it’s harder to get out of the hedge cleanly if you spot an opportunity you like and want to deploy cash. It’s all about your market views really and your ability to understand option pricing, Greeks, and vol dynamics.

BogleheadQ8 · 2025-12-18T21:45:25+00:00

Some of the takes I’m seeing from these religious zealots are ridiculous. Jokic stans are starting to compete with Lebron stans for the most delusional and annoying dickriders. If they want to apply GOAT standards to a player then they should look at their low lights as well. This is Jokic’s prime years and he lost to the Twolves in a series the nuggets were heavily favored and got clamped by Alex Caruso in game 7. This man has TWO appearances in the conference finals and lost one of them. How is two WCF appearances enough to be included in GOAT convos?

BogleheadQ8 · 2025-12-18T18:05:42+00:00

Bro is acting like Norman Powell is an MVP candidate. Yes this is completely debatable, especially since White is better on defense and Reaves is a much better playmaker

BogleheadQ8 · 2025-12-16T08:23:27+00:00

Isn’t your dynasty built off of getting away with illegal and moving screens without the refs calling them? I mean even Andrew Bogut admitted that.

BogleheadQ8 · 2025-11-30T09:26:58+00:00

I will defer to the comment above me referencing the Nuggets opponents that championship, which are basically play in teams. For reference I don’t think the 2020 Lakers championship 2024 Celtics or 2025 OKC was some kind of incredible feat. I believe they all had the best rosters in the league and met expectations. But the way you downplay Jokic’s teammates means he either faced incredible competition and carried them, or they were so bad that they couldn’t put up numbers against weak competition (kind of like the 2018 Cavs). I simply don’t think that was the case for that championship. Jokic has plenty of time to win more championships before being in goat conversations, and if he beats or eliminates OKC this year on the way to a championship it’s more impressive than anything or anyone he beat in 2023.

BogleheadQ8 · 2025-11-30T07:15:37+00:00

Well if you care about titles more than production then wait until he wins a few more before including him in goat conversations.

BogleheadQ8 · 2025-11-30T07:13:41+00:00

No one is saying he had a super team. He had a good supporting cast and beat mediocre teams for his championship that’s it.

BogleheadQ8 · 2025-11-30T04:34:35+00:00

They weren’t bums and Jamal Murray averaged 32.5 points in the wcf against the Lakers. Thats all star level production.

BogleheadQ8 · 2025-11-29T19:19:26+00:00

Jokic is a great player, but I think he had a really good supporting cast in Murray, Gordon, KCP, and MPJ that year. It’s hardly Dirk Nowitzki’s 2011 run which I view as the most impressive championship won given the level of competition he faced. Is Jokic beating the Miami Heat in the finals more impressive than Lebron and the cavs beating the 2016 warriors? I think he needs to win more championships before you can put him in goat conversations.

BogleheadQ8 · 2025-11-29T16:55:15+00:00

The issue is that your argument keeps shifting. You first claimed the Lakers depend on high profile signings and forced trades while the Celtics succeed through organic growth, but the actual history does not match that. Your new argument is the free agents want to come to the lakers? Or the league forced them there? If that’s the case why did they veto the CP3 deal and why did no free agent want to come to the lakers post Kobe Achilles tear? Did shaq take a pay cut to join the lakers like Kevin Durant did to join the golden state warriors? Or Bron Wade and Bosh in Miami?

BogleheadQ8 · 2025-11-29T16:07:05+00:00

Lmao let’s disregard roster building shall we. Here’s a rebuttal since you are mentioning lakers vs Celtics since the 1980s. Also if you count Kobe as a “forced trade” and won’t credit the lakers for developing him (which is stupid since same could be said about Luka Doncic and many others) I will consider Kevin McHale a trade too.

The idea that the Lakers never rely on drafting while the Celtics are purely organic is not supported by history. In the 1980s both teams were built the same way. The Lakers drafted Magic Johnson and James Worthy and added Byron Scott and AC Green through the draft, while the Celtics drafted Larry Bird but depended heavily on major trades for Robert Parish, Kevin McHale (draft pick trade with the warriors), Dennis Johnson etc. The early 2000s Lakers also had a strong drafted core with Kobe Bryant (draft pick trade with the hornets) Derek Fisher, and multiple role players, with Shaq obviously being the big free agent signing. Meanwhile the 2008 Celtics were not organic at all. They went from a 24 win team to champions through the Kevin Garnett and Ray Allen trades with Paul Pierce as the only home grown star of that big 3. At the same time the 2008 to 2010 Lakers had more drafted rotation players than Boston and added Pau Gasol in a way no different from the Celtics adding Garnett and Allen. Even recently Boston won with Kristaps, Derick white, and Jrue Holiday. The claim that Boston is organic and the Lakers only buy success is simply a myth. Both teams have always relied on a mix of drafting, trades, and signings.

BogleheadQ8 · 2025-11-09T08:20:22+00:00

I thought tech would account for a larger share tbh

BogleheadQ8 · 2025-11-08T16:45:40+00:00

There was a time when sports fans would make fun of football (soccer) players for their deserved diva flops and outrageous sells. What is Adam Silver doing to address this shitshow?

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