Thanks to federal regulations that got increasingly weaker over the course of the 1980s, 1990s, and early 2000s, the derivatives industry boomed for a sustained 30 years until the economy could no longer account for the risky nature of these investments. In the process, derivatives trading became one of the hottest professions on Wall Street as well as one of the highest-paying careers in the burgeoning investment industry. Today, salaries are a bit lower than they were at their peak but the actual process of trading derivatives is back on the rise. With new regulations and procedures in place, banks and their investment representatives feel secure trading these mechanisms once again.
For those with a degree in finance, getting into this field isn’t as easy as it once was. Jobs still abound, but they’re a bit fewer than at the peak of the early 2000s stock market boom. Salaries within the industry remain robust, with varying levels of annual compensation based on the exact position held by each investor. Here’s a look at what to expect in this complicated industry.
Great Compensation at All Levels, Even for Entry-Level Positions
Trading derivatives is about more than actually swapping these complicated investment tools. Indeed, the industry requires risk analyzers, securities processors, and a bevy of other highly trained financial experts who can assess risk, recommend the proper order, and then place that order if they wish to do so. Entry-level traders typically start in a security analyst position. According to Indeed.com, which monitors the salaries of all job listings posted through a large number of jobseekers’ websites, the average salary for that position is about $33,000 for the entry-level candidate. Most people advance quickly, however, and many professionals end up more than doubling their salary in just a few years.
The most popular mid-level position within the derivatives industry is the operations analyst. This person is the one responsible for interpreting the recommendations of securities analysts and making swaps, trades, or other calculated moves designed to boost the value of a portfolio. Their increased level of responsibility, and the increased consequences of their decisions, means that these professionals earn significantly more money per year. In fact, the average salary of all workers in this part of the industry is about $65,000 each year. That’s nearly double the entry-level salary, and that’s before candidates reach the management level in this field.
The management level is, as should be expected, where the highest salaries are earned. Most managerial positions earn between $104,000 per year and $137,000 per year based on the unique nature of the position, the candidate’s experience, and the size of the firm where they hold the position. Many derivatives traders will go on to advance into leadership and executive positions, further doubling their average annual compensation.
Keep in Mind that Salaries Do Vary By State
The best place to be a derivatives trader is Wall Street, with New York’s average compensation levels far outpacing those in the rest of the country. Traders in Chicago and Los Angeles also do pretty well, with New Jersey and Pennsylvania rounding out the top 5 states for those in this field.
With an industry that is once again growing and governed by newer, safer regulations, these positions are a top consideration for recent graduates. Excellent pay and benefits, a fast-paced work environment, and bright future prospects make derivative trading a great choice for qualified applicants.
