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Bon JournalOptions translatedThe high turnover of deal entry clerks posed a big hiring problem for the trading floor. Deal input was a manual, repetitive, and therefore tedious activity. However, the deal input supervisor refused to take on noncollege graduates without A levels in mathematics. The supervisor explained that most deals were very complex and required knowledge of options. Options are derivative instruments. What are derivative instruments? They are financial products whose value (price) depend on something else (also called underlyings). To understand derivatives, you need to have studied calculus. But not just basic college level calculus. The valuation of options requires an understanding of stochastic calculus. Coincidentally graduates with good understanding of such mathematics also came with high ambition and great expectations. They got frustrated with entering trades. The smart ones spent their time networking with traders, effectively collecting options. Strictly defined, an option is the right but not the obligation to purchase or sell the underlying product. Translated, an option gives you access. So the more people that know how good you are and what you're after, the more opportunity you have for advancement or transfer  the more likely you'll get what you want. Understanding options was a fundamental requirement of the trading business. Applying them to one's career aspirations meant collecting options and exercising them at the right time. Translation: good office politics. The more options you have (the more people you know, the more skills you have), the more valuable you are. The more valuable each option is (the right kinds of people, the right kinds of skills), the more valuable you are. Ironically, an option becomes more valuable if the value of the underlying is more erratic (volatile). In other words, a stock option is more valuable than an interest rate option if stock prices are very erratic (going up and down frequently) as compared to interest rates which don't move as often and their movements are more predictable. Stock price volatility is one reason for the high value of options on this company's stock. And for its employees, this is selfexplanatory: high turnover of deal input clerks, constant rotation of analysts and associates through different departments, rapid career advancement for young, bright, ambitious, and beautiful dealmakers, .... entrepreneurial, innovative, opportunistic .... But perhaps most of all, what's transparent to insiders was opaque to outsiders. The sheer number of moving parts (staff turnover, deals, acquisitions, etc) and the speed of movement kept the complexity web spinning while the rest of the world watched from the outside. Eventually the deal supervisor figured out that knowledge of options was actually detrimental to her goal of keeping the recruits she trained. So she lowered her entry standards and accepted a college graduate who only had an O level in mathematics. 13 December 2001 Thursday 
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