Are there any "hot" area on the equity side at the moment? I am guessing program trading might be a "hot" area, but I am not certain. What about regular equity derivatives, converts?Could anyone on the equity side share their thoughts here?

what do u mean by hot?

A "happening" area. Everyone wants to join those areas, traders on those desks make significant amount of profits. Example on the Fixed Income side would be CDS/CDO and MBS products.

I would say the equity derivs side is relatively hot at the moment. I think the main reason for that is the recent sprout of hybrid products and the need to incorportate eq derivs. There are probably a few other market factors involved.Program Trading has pretty much peaked out, there are A LOT of players in the market and mini-players still trying to enter the market. The big IBs will continue to make their profits off the back of PT but buy-side clients are smarter so IB PT desk can't rip-off the buy-side clients as much as before. This obvioulsy translates to lower revenues in the long term.Unless you want to build equity trading algos, there isn't much scope in plain equities.

Could you elaborate more on Equity Derivs? Like Variance Swaps/Options? I hear that vanilla equity options kinda flat now, not sure if that's true or not.

vanilla equity options

Why do vanilla equity options need quant? The first thought I get is that they would easily be taken care of by off-the-shelf software.Aren't there more opportunities in exotics / structured derivatives than vanilla?On the other hand, if you meant, that trading in vanilla options offer great scope currently .... that should probably open opportunities for tranders, rather than quants ... ain't it?(That an equity derivatives quant, could move into a trader role, is a different thing, though.)

bhutes i agree with you but no one said anything about quants being needed for plain vanilla options. The question was regarding a hot area currently in equities.

QuoteOriginally posted by: FlyingQuantbhutes i agree with you but no one said anything about quants being needed for plain vanilla options. The question was regarding a hot area currently in equities.No quants are need for PRICING vanilla equity options. But setting up a trading strategy is entirely different.

hedgeQuant, definately possible in some organisations but I doubt anyone will have a dedicated quant team for vanillas. As I mentioned previously, there's a trend to incorporate equity derivs into hybrid products. Structuring/Quant teams will def be employed to market/price these instruments. But for plain vanilla trading strategies either off the shelf or in house built products give orgs all the analysis they require. And if worse comes to worse they always have their BBG terminals.I'd like to hear some other opinions on hot areas in equities.hedgeQuant, bhutes what do you guys think?

QuoteOriginally posted by: FlyingQuanthedgeQuant, definately possible in some organisations but I doubt anyone will have a dedicated quant team for vanillas. As I mentioned previously, there's a trend to incorporate equity derivs into hybrid products. Structuring/Quant teams will def be employed to market/price these instruments. But for plain vanilla trading strategies either off the shelf or in house built products give orgs all the analysis they require. And if worse comes to worse they always have their BBG terminals.I'd like to hear some other opinions on hot areas in equities.hedgeQuant, bhutes what do you guys think?I am sorry that I digressed a little. I was thinking about vanilla options as an instrument to trade. For example consider a volatility trading strategy. You are long or short volatility based on your predictions. The trading startegy with vanillas is straight forward: buy/sell a suitable option and delta hedge. The key thing is the prediction of realized volatility. Of course this is very different from pricing an option.From where I sit (a very small shop) we cannot trade exotic options / hybrids. So I cannot really comment on equity based products. But high frequency equity trading seems to be defnitely catching on - market neutral or otherwise.

In equity.. the hotter areas are varswap dispersion trading.. essentially trading correlation.. and trading equity-credit hybrids... CB's are still quite profitable desks, but with all the convertible arb axes around.. it can become a dangerous market very quick.