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Derivatives Analyst Job Description

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A derivatives analyst applies complex math formulas and builds computer algorithms to evaluate financial data, detect investment trends and recommend asset selection strategies. He works directly with corporate portfolio managers, proprietary traders and risk managers. A derivatives analyst also ensures that employees comply with risk control procedures established in financial transactions when performing their duties.

Nature of the Work

A derivatives analyst evaluates a firm's financial futures transactions, such as investments in options, swaps and forwards, and ensures that traders abide by regulatory requirements. For instance, she ensures that a trader engaging in swap transactions conforms to International Swaps and Derivatives Association (ISDA) requirements. A derivatives analyst also reviews daily transaction logs (records) to ensure that a firm's investment profit and loss statement includes all trades at a given point in time.

Education and Training

Financial institutions engaging in securities exchange transactions prefer job seekers who have a master's degree in finance or investment analysis. A master's or doctorate degree in statistics or econometrics is usually necessary for a quantitative derivatives analyst position. A junior derivatives analyst will have a four-year college degree in accounting, finance or business management. Firms often provide continuing professional education (CPE) courses for derivatives analysts.


Economic conditions and investment returns on securities exchanges affect a derivatives analyst's pay levels. His seniority, length of service, professional licenses and academic degrees also affect his remuneration. A typical pay package for a derivatives analyst includes wages as well as stock or cash bonuses. The U.S. Bureau of Labor Statistics reports that derivatives analysts earned median wages of $73,150 in 2008, excluding annual stock and cash bonuses, with the lowest 10 percent of the profession earning less than $43,440 and the highest 10 percent earning more than $141,070. The same report indicates that junior derivatives analysts and sales agents earned average salaries of $68,680 in 2008, excluding annual stock and cash bonuses, with the middle half earning from $40,480 to $122,270.

Career Development

A derivatives analyst's chances of career growth depend on the firm's size and staffing needs. She also can be promoted faster if she performs well. An advanced degree, such as a master's in a quantitative field, or a professional certification is a career booster. A skilled and effective derivatives analyst will be promoted to a higher function, such as derivatives strategist, investment manager or senior derivatives associate, in a few years.

Working Conditions

A derivatives analyst usually works normal business hours on weekdays. He may work longer hours if business conditions or developments in financial markets require it. For instance, a derivatives analyst can be busy at the end of the quarter when a corporation performs risk and self-control self-assessments (RCSA) in the derivatives trading department.


Marquis Codjia is a New York-based freelance writer, investor and banker. He has authored articles since 2000, covering topics such as politics, technology and business. A certified public accountant and certified financial manager, Codjia received a Master of Business Administration from Rutgers University, majoring in investment analysis and financial management.

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