Still like to know how options MM's don't get blown away

[stock777]

on a BSC

 

[ctarmor-et]

They are on both sides. So their CALL inventory is mostly worthless but their PUT inventory is cranking the $....

 

[makloda]

They don't get blown away by being highly diversified across options in 100s of stocks and never being overweight a single directional risk. Delta hedging becomes impossible with a 90% overnight move.

 

[Wayne Gibbous]

Hopefully IB didn't get bagged on that one!

They, well... have had a couple op trades go very bad in the recent past...

Peterfly might have to have his Bentley's detailed only every other week.

 

[xflat2186]

if you're a"local" mm and you're not part of a position in hundreds of other books all central dispersion hedged then you always have to be aware of your net put account and your net call count. PLus you should always run your risk plots very far out so you know your real risk in a huge move in the stock. Your clearing firm does this to evaluate your positions for haircut purposes.

 

[riskfreetrading]

Quote from makloda:

They don't get blown away by being highly diversified across options in 100s of stocks and never being overweight a single directional risk. Delta hedging becomes impossible with a 90% overnight move.

True only if you short gamma and net naked. If you are long gamma, gaps are great.

 

[xflat2186]

Quote from riskfreetrading:

True only if you short gamma and net naked. If you are long gamma, gaps are great.

You can be long gamma where the stock closed the night before and gap to well through your long gamma and well through your short strikes to never never land. A managers job is to know the net risk on a gap either way.