Being both long and short at same time

[qlai]

Gamma Scalping is using options to hedge with futures as the symbol moves up and down, your delta changes.

Are we saying the same thing?

"Gamma scalping is the process of adjusting the deltas of a long option premium and long gamma portfolio of options in an attempt to scalp enough money to offset the time decay of the position."

 

[Robert Morse]

To give an example, some longer term passive investors may use index futures rather than index funds/ETFs in one acct and in another they may be doing shorter term trades.

I did not watch the entire video and I'm going to. The comment made was"the guy describes how he has two separate accounts to be able to be both long and short at the same time." If he is buying futures at one and hedging at another, that makes no sense from a margin perspective and adds nothing. If he is long futures in one and short futures in another, that makes less sense. There is just no advantage to split your positions in one product over two FCMs.

Trading an arb from one future to another that is similar (Gold vs Gold) or to an ETF, is not what was asked by the poster.

 

[qlai]

basically the market has been quiet. And you are expecting price to move explosively (could be up or down).

So you go long and short at the same time.
You have to do it on two accounts.

So you book profits in one and wait for price to revert in another? That's not what the guy is doing ... he is scalping.

 

[Robert Morse]

So you go long and short at the same time.
You have to do it on two accounts.

Why not just be flat.

 

[Robert Morse]

Are we saying the same thing?

Yes but the post did not ask about options. and why do that at two FCMs?

 

[qlai]

Why not just be flat.

Because there's a difference between open and closed pnl. If you believe in mean reversion and have enough time and margin to see it through, you don't need to guess the direction. Book profits and wait for the opposite half to revert back to break even or overshoot in opposite direction. Now take it to small range and split second time frame and you start market making.

 

[Robert Morse]

Because there's a difference between open and closed pnl.

Ok, after this I tap out. 1256 contracts in the US are mark to mark for taxes. There is no difference between a P/L from an open position and a closed one. They are taxed the same. There is no difference between realized and unrealized. Booked profits in one place and not in another are the same. Sales do not require a locate like stocks and there is no down-tick rule.

 

[qlai]

Ok, after this I tap out.

Robert, I appreciate your input. At no time do I ever think I know more about market making than you There strategies where people sit through large open losses to end up small but consistent closed proits.

 

[JSOP]

Right, now you can gamma scalp ... when price moves up, short the underlying. As price moves back down, cover. You are never under risk of large adverse move. So can this structure be set up synthetically? You have both long and short positions - that is your box. Now bid and offer inside that box without worrying about explosive moves. Isn't this what Market Makers do when they hedge with the underlying? They capture the spread minimizing the risk of being run over.

What if the price doesn't move at all? You lose all of your premiums.

 

[destriero]

Right, now you can gamma scalp ... when price moves up, short the underlying. As price moves back down, cover. You are never under risk of large adverse move. So can this structure be set up synthetically? You have both long and short positions - that is your box. Now bid and offer inside that box without worrying about explosive moves. Isn't this what Market Makers do when they hedge with the underlying? They capture the spread minimizing the risk of being run over.

Please stop.