How Eclipse Trading's process runs, as candidates and the firm describe it, and the questions candidates report, each with a worked solution. Free, no sign-up.
Try each one before opening the solution. Interviewers change the numbers, so learn the method.
Trainee Trader · Interview · Options · reported by a candidate
Explain these option strategies and the main Greek exposure of each: straddle, strangle, butterfly, condor, calendar spread.
Model answer
Long straddle: buy a call and a put at the same strike. Profits from a big move either way. Long gamma and vega, short theta.
Long strangle: the same with an out-of-the-money put and call. Cheaper; needs a bigger move.
Long butterfly: buy one low strike, sell two middle, buy one high (all calls, say). Pays most if the price ends at the middle strike. Short gamma and vega near the middle, with limited risk.
Long condor: a butterfly with the middle split over two strikes: a wider, flatter profit zone.
Calendar spread: sell a near-dated option, buy a longer-dated one at the same strike. Profits if the price stays near the strike while the short option decays. Long vega (the back month has more), short gamma.
Draw each payoff as you explain it; interviewers mostly check that you can see the shape.
Graduate Trader Trainee · Interview · Market knowledge · reported by a candidate
What is the VIX? What is HIBOR? Which part of the Federal Reserve sets US interest rates?
Model answer
VIX: Cboe's index of the S&P 500's expected volatility over the next 30 days, computed from S&P 500 option prices. Quoted as an annualised percentage; it tends to jump when stocks fall.
HIBOR: the Hong Kong Interbank Offered Rate, the benchmark rate at which banks lend Hong Kong dollars to each other, published for several maturities.
The Federal Open Market Committee (FOMC) sets the target range for the federal funds rate.
Market-knowledge questions reward reading the news before the interview: know roughly where the VIX, major rates and exchange rates are that week.