Futures and options trading has been at the heart of Wall Street firm’s growth over the last 20 years. Although it has taken a PR pounding over the last 18 months during the credit crunch there is no doubt that trading derivatives will remain central to investment bank’s money-making plans in the coming years. The following lays out one approach for getting a role on an options trading desk in this highly competitive industry.

1. Get educated: general education. Gone are the days when the plucky clerk could fight her way from the backroom to being head of a trading desk in just a few years through street smarts alone. Nowadays, you are going to need some major educational attributes just to get your foot in the door for interview at the big firms. A good school, a good university and good grades will help you over the first hurdle. Demonstrating rounded knowledge on a broad range of subjects and being informed on current affairs is just as crucial; it’s no good being incredibly good at science if you can’t offer an opinion on the latest economic news story.

2. Get educated: Finance. The pricing and valuation of options and futures is based on a lot of theory, much of which may seem very alien at first. To help with this, if you are still at school get yourself on any statistics and calculus courses available. Learn about probability distributions, they will be the day-to-day tool you use to value options. If you haven’t covered option theory before, I encourage you to pick up a copy of Natenberg’s “Option Volatility & Pricing”. It makes the basics of option valuation very accessible.

   Once you’ve taken all you can from Natenberg move onto Hull’s “Options, Futures, and Other Derivatives”. This is the derivative bible. The theories presented within its pages still form the basis for 90% of the discussions that will occur on a trading desk on any given day.

3. Get ‘option smart’. You’ve learnt all the theory, now forget it all! Or at least cast it aside for a while. The models that are used to price and hedge derivatives are exactly that, models. Whilst they are incredibly useful tools, you must always remember that they are based on sets of assumptions and, as such, come with certain limitations. The best way to help marry your burgeoning theoretical understanding with the practical realities is to manage a virtual option portfolio. The CBOE offer an excellent ‘paper trading’ tool on their website which allows such an opportunity. Begin here before you consider moving on to open an online option trading account where you will put real money at risk.

4. Get experience. If you are still at school or university fill your summers with internships and work experience in firms associated with the futures and options business. Brokerages, sommodity options trading, index futures, stock options, anything that gets you exposure and increases your knowledge. This will help you stand out from the crowd when it comes to interview time.

5. Get stubborn. You’ve got the education, you’ve got the theory, you’ve got the option smarts and you’ve got the experience. Now all you need is the trading desk job. As the rewards of working on a Wall Street trading desk can be large, the competition for such jobs is fierce. Develop a thick skin and a stubborn determination – you’ve prepared yourself well for this dream role, so don’t be put off at this stage. You WILL face multiple rounds of interviews and you WILL get rejections. Do not take a rejection personally – get feedback and improve for next time. Eventually you will land the job you desire.

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