Do you have what it takes to make it in equity derivatives?

It's best to start at the bottom: as a graduate recruit. If you look keen, a big bank will train you in the art of equity derivatives products, but you must be prepared to cut your teeth on simple (cash) equity products first.

What are they?

Cash equities' is another word (or two) for standard equities. These are the same as 'stock.' When a company wants to sell part of itself, it divides itself up into smaller saleable units, or 'stock'. People who own a company's stock own a share in the company's assets and its income.

I didn't mean cash equities... What are equity derivatives?

Ah. Equity derivatives are financial products that are derived from equities. They might take the form of options (a right to buy or sell a product when it reaches a certain price), swaps (a right to swap a bond for an equity when it reaches a certain price), or futures (an agreement to buy or sell a set amount of a commodity for a specific price in the future).

What do I do every day?

Within the realm of equity derivatives, you can opt to be a salesperson, a trader, or a structurer. Salespeople sell equity derivative products (obviously enough). They usually specialise in a particular kind of client, namely retail investors, institutional investors (pension funds), or corporates (companies). Traders, trade equity derivatives, and structurers put the products together.

Tell me who I should aspire to work for...

Try and join a team at one of the top equity derivative houses. In Europe these are: SG, BNP Paribas, JP Morgan and UBS. Time at a top player should set you up for being poached at huge expense by a smaller rival trying to build a team when volatility returns.

What qualifications do I need?

Maths helps, as does anything vaguely mathematically oriented. At Merrill Lynch, the corporate equity derivatives team comprises engineers, an economist and an astrophysicist. A mathematically oriented Phd will help if you want to be a structurer. As with all structured products it will also help if you are French, or at have at least studied at a top French finance school, such as Université Paris Dauphine, the mysterious source of many of Europe's structured product specialists. If France is out of the question, an MSc at London's Imperial College should also stand you in good stead.

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