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I am starting to write my M.Sc. in Economics thesis tomorrow on Credit Default Swaps, especially the mathematical/valuation part and also a bit of market analysis / empirics. I would love work for a derivatives desk or to get into Fixed Income Sales/Trading afterwards. Do you think it's the right choice? Is the thesis important at all?
What do you think about CDS? After researching papers I have the impression, that after the big bang '07/08 not much has happened. I don't want to be focusing on a market that is in decline and has no future. On the other hand, CDS are still the basic go-to credit derivatives and they will probably still be around for a long time.
Background: did a B.Sc. in Econ with a thesis on option pricing (BSM, jump-diffusion, stochastic volatility) at the university's chair of financial engineering. After graduation, between BSc. and MSc., I spend 6 months working at a top IB on the derivatives sales & trading desk, but also got in touch with other teams (equities, fixed income, commodities). I would want to return to those fields. Basically my only other choice offered by my supervising professor right now would be variance swaps, but this is a far more narrow field. I don't want it to be too specialized. Also, I want to do something new. I already know a lot about option theory, no need for me to repeat BS, Merton, jump-diffusion, Ito, etc.
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>the have no idea wtf is going on in that gif looks like some mad scientists computer in a apocalypse film
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your background already puts you as more qualified to comment on the topic than 99.99% of this board. idk why you're asking advice here.
ask your professors desu. my personal understanding, and im no expert on this, is a lot of large banks are cutting down fixed income desks and there is, as you said, not much happening in this field. but finance is quite cyclical so that could very well change in a couple of years.
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>>1266016
Naked CDS should be banned forever, hedging is fine. There will always be CDS because of risk hedging when other options aren't properly viable. The mathematics that go along with it isn't hard either, unless you're quantifying risk premium in some fucktard random way.
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>>1266016
Start a fucking blog man. What was your question? "What do you think about CDS?" They're a great hedging tool for FI desks in case of volatility within the credit markets. Primarily used by debt-capital guys on debt syndication deals for corporate bonds. Some people gamble in that side of the market but they're dumb to do so. It's simply a hedging tool to ensure the deal doesn't go south once you get your primary support for the debt's issuance (the original anchor investors buying up bits of the corp-bond at the beginning of the roadshow).
>>1266053
if naked CDS should be banned then so should naked shorts, naked calls, naked currency swaps, and every other type of swap contract where the buyer doesn't own the underlying asset. Let those speculators gamble man. They aren't fucking up the market anyways.
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>>1266016
Also, why does your bloomberg panel look fucking ancient? Is it because you took the picture from this article?
>https://baselinescenario.com/2008/11/28/credit-default-swaps-bankruptcy-prediction/
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>>1266016
Where can I learn about derivatives online? They interest me greatly.
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>>1266411
Krassimir Petrov channel on YT.
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>>1266016
>university's chair of financial engineering.
>financial engineering
Alchemy
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