Spread Trading Quant Interview Guide
Spread trading quant interview guide covering spread definition, hedge ratios, stationarity, carry, costs, examples, and risks.
Candidates comparing relative price relationships across instruments.
Spread trades compare instruments
A spread trade goes long one exposure and short another to express a relative-value view rather than a pure directional view.
The spread definition drives risk
Dollar spread, ratio spread, beta-adjusted spread, regression residual, and contract spread each behave differently under stress.
Concrete example
A trader may buy one futures expiry and sell another when the calendar spread looks too wide relative to storage fundamentals.
Costs and carry matter
Financing, borrow, roll, transaction costs, and liquidity can dominate a spread that looks attractive on a chart before costs.
Common mistakes
Candidates often call spreads hedged. A spread reduces some risks while keeping basis, model, liquidity, and tail risks.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.