Sales & Trading Interview Prep That Gets You on the Desk

Pitch me a trade.

Give a clear thesis, the instrument to express it, and your entry/exit. Example: 'I think the 2s10s curve steepens as the Fed cuts into a soft landing. I'd express it as a curve steepener — long the 2-year, short the 10-year — sized to a defined stop if the curve flattens 15bps against me, taking profit on a 40bp steepening.' Show a view, a way to trade it, and risk management.

What is the bid-ask spread, and how does a market maker make money?

The bid is the price a market maker will buy at; the ask is the price they'll sell at. A client buys at the ask and sells at the bid, so the maker captures the spread as compensation for providing liquidity and warehousing risk. Tighter spreads mean more liquidity and competition; wider spreads compensate for volatility or thin markets.

What is duration, and what's the difference between duration and convexity?

Duration measures a bond's price sensitivity to interest-rate changes — longer duration means a bigger price move for a given rate change. Convexity is the second-order effect: it captures how duration itself changes as rates move. Because of positive convexity, a bond gains slightly more when rates fall than it loses when rates rise by the same amount.

What is delta, and how does a trader delta-hedge?

Delta is the first derivative of an option's price with respect to the underlying — roughly how much the option moves for a $1 move in the stock. A call's delta runs 0 to 1, a put's −1 to 0. To delta-hedge, a market maker who is short a call (positive delta exposure to hedge) buys shares so the position is delta-neutral, then re-hedges as the underlying moves and delta changes (gamma).

What is an interest rate swap?

A contract where two parties exchange cash flows — most commonly one pays a fixed rate and receives a floating rate (e.g., SOFR), and the other does the reverse, on a notional amount. No principal changes hands; only the net interest difference is settled. Companies use them to convert floating-rate debt to fixed (or vice versa) or to hedge rate exposure.

A fair coin is flipped until the first heads. What's the expected number of flips?

This is a geometric distribution with p = 0.5, so the expected number of flips is 1/p = 2. Walk through it out loud: E = 1 + (1/2)E because with probability 1/2 you stop, and with probability 1/2 you've used one flip and start over — solving gives E = 2. They care about your reasoning, not just the number.

Make me a market on the number of [X]. Now I'll buy at your offer — what do you do?

Quote a two-sided price around your true estimate, e.g., '40 at 44' (bid 40, offer 44), keeping the spread wide enough to protect against being picked off. If the interviewer hits your offer (buys at 44), that's information — they may know it's higher, so you should revise your estimate up and tighten or raise your next market. The game tests how you price uncertainty and update on order flow.

Why sales and trading instead of investment banking?

Tie it to how you think and what energizes you: real-time markets, fast decisions, and a daily P&L that tells you immediately whether you were right, versus multi-month deal processes. Reference a specific market moment you followed and traded a view on. Avoid generic 'I like the fast pace' — name a desk or asset class and why it fits you.