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If you bring it down into the component pieces, this title is pretty easy to parse.
So a financial derivative is any financial vehicle that is tied to another asset without actually owning the asset. You could think of that as back in 2008, there were such things called mortgage-backed securities which were tons of mortgages, All bundled together but traded as one distinct stock. You have the exposure to the housing market through this derivative, but you actually don’t own any direct housing in the market.
And then trading volatility is usually referenced as short-term bumps in the market. You can take a look at any stock and you might think it has a fair price, but believe in some type of short-term swing. So you take an appropriate position for whatever swing direction you think is going to happen, and you prepare to exit that rather quickly. When volatility is discussed in such a manner, it’s usually in the realm of minutes, hours, and days instead of months and years.
So to put it all together, if someone’s job title includes financial derivatives trading volatility, they probably work in some sort of financial derivative arbitrage system, where they specifically take the riskier derivative aspects of the market and try to make money in the incredibly short term, off of quick and usually tiny movements in a securities price.
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