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Continous hedging as a rachet device to lock-in profits
man man man, you don't even understand the simplest basics of options when s = 100 and K=90 you sell deep in the money calls, when at expiration price is above 90 you will have to deliver stock, either from your inventory or your broker will give you a forced short position -
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Continous hedging as a rachet device to lock-in profits
so you write deep in the money put options and wait for the flashcrash :D -
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Continous hedging as a rachet device to lock-in profits
That's very simplistic thinking in this context ... -
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Continous hedging as a rachet device to lock-in profits
look up gamma-scalping on google ... that might make you somewhat wizer ... gamma-hedging is not a term I am familiar with ... unless you mean that market makers want a balanced portfolio of their Greeks ... -
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Continous hedging as a rachet device to lock-in profits
if you want to trade vol you got to hedge of course ... but that's a game way above your level -
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Continous hedging as a rachet device to lock-in profits
I used to be market maker, I have know tons of market makers, how many market makers do you know ... yes there were the ones that didn't hedge properly ... they almost all blew up ... -
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Continous hedging as a rachet device to lock-in profits
The article is correct, you aren't ! -
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Continous hedging as a rachet device to lock-in profits
and delta hedging almost continously is being done by market makers ... rest assured ! -
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Continous hedging as a rachet device to lock-in profits
This is not a correct answer to his question imho ... for derving options delta is necessary ... but due to gamma, delta changes continuesly and you need to adjust your delta, gamma measure how much the delta changes as the price of the underlying moves so you can't delta-hedge without it ... -
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Continous hedging as a rachet device to lock-in profits
I am trading here too, so not overly concentrated on this bullshit stuff ... it's all very basic and I got distracted from my main goal: making money trading ... -
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Continous hedging as a rachet device to lock-in profits
the correction is is right ... -
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Continous hedging as a rachet device to lock-in profits
but this won't solve your problem since you don't understand gamma ... -
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Continous hedging as a rachet device to lock-in profits
oops sorry, I wrote too quickly the correction was right ... -
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Continous hedging as a rachet device to lock-in profits
no this is not true either: what he wrote is correct ... these are the initial hedges to put in ... however to REMAIN delta neutral you need gamma which will change the delta dynamically ... but that's the fact he is oblivious off -
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Continous hedging as a rachet device to lock-in profits
are you 15 or something ? For the record I got over 15 books on options theory and I read them all more than once ... keep ploughing away at your so called papers ... -
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Continous hedging as a rachet device to lock-in profits
yes, everybody is wrong and you are right .... I have heard this tune before ... problem is nobody believes you ... hope you get that Noble-prize too ROFL -
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Continous hedging as a rachet device to lock-in profits
it's too late to chat with ignorant people who think they know something without having knowledge of some basic facts and are too lazy to read a book ... -
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Continous hedging as a rachet device to lock-in profits
ROFL ! you have no clue whatsoever what you are talking about ... -
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Continous hedging as a rachet device to lock-in profits
nope, it doesn't work that way ... you need it both: gamma affects delta ... you can't have one without the other ... that's why you need to read a serious book ... it's not something I can explain here in a few lines ... -
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Continous hedging as a rachet device to lock-in profits
no it's not I just changed my post a little bit to make it more clear your problem is you don't understand gamma ... and how it affects the delta-neutral hedging in proces ...