Delta-Gamma Hedging Definition -

Theta gang ain't shit.

Now's a good time for to get a lesson in the greeks you fucking retards. This document outlines the relative risks and rewards of certain trading strategies and how to manage risks along with some basic math and econ. This should be basic for most of you.
Why do stocks go up?
Because capital growth has a diminishing returns to scale. In the long run capital is used to create more capital generating growth until it balances with capital depreciation which is linear. You can increase the equilibrium capital accumulation by increasing savings rates essentially trading off short run consumption for long run consumption. The implications of this are that less capital intensive economies grow at faster rates than developed because developed economies are very close to hitting the equilibrium point and have to rely on technological advancements for long run growth. Not every economy is equal though, all have differences in economic institutions, government effectiveness and political norms which will also affect their long run effectiveness. Long story short if the government engages in ineffective policies like protectionism, price manipulation, overly burdensome regulations, underregulation, or inefficient redistribution programs the short run micro/macro picture will be hurt and reflected in the long run picture. The US has had a thriving stock market despite having relatively low growth because it has taken the first mover advantage in many industries. Global Tech, higher education, finance, and pharma are all centered in the US because the US policies have made doing business in the US the optimal choice for these industries. For as long as the US is a capitalist nation you can be sure that the stock market will go up in the long run. This is not necessarily the case for commodities or forex as higher growth has typically led to investments in productive efficiency outweighing increased demand in raw materials and exchange rates do not have a long run trend. Fundamentally, the stock market is a good place to invest savings into in the long run.
Stocks and exponential returns.
Stocks go up so you want to capture the value of price increases. Stocks have a delta of one and a gamma of zero resulting in a linear return to movement of the stock price. Long run capital accumulation, although diminishing, is still exponential and in the long run will return an exponentially increasing return to investment on stock. Linear gains * exponential increase in underlying = exponential gains. But what if things go down? In the short run stocks decrease in value at exponential rates which is absolutely fantastic for investors because exponential declines are diminishing in scale. 10% of 100 is 10, 10% of 90 is 9, 10% of 81 is less and so on and so forth. You may get linear returns from movement but you receive increasing returns to scale gains on the upside and decreasing returns to scale losses on the downside.
Delta and Gamma
Long options have even better fundamentals than stocks because they amplify the exponentiality through gamma. As an option moves into the money its delta increases creating exponential gains in value. As an option moves out of the money delta decreases, lowering losses. Thus options while having more risk per dollar than stocks have far superior risk returns in the short run.
Theta and Vega
The opposite is true of selling a call and you're put into the position of wanting to sell when times are most dire and hold when times are good. In exchange you get benefit from theta decay but if you can reasonably predict the movement of the market that's pretty much nothing compared to the gains from delta you could get investing the same amount of money into long calls. Selling also requires way more money further reducing its risk to return. But what about vega? When markets crash, volatility skyrockets. Long calls gain and the opposite is true once again for selling them.
Mathematically, buying longs has the best return on risk of any option strategy but higher absolute losses when delta doesn't move in your favor. Selling longs or spreads has a way worse return to risk but you'll lose less money when delta moves against you and it's harder for any one position to lose all of its value.
Theta gang isn't more profitable than bullgang, it's less risky per dollar spent. The reason market makers don't play like WSB retards is because they play on margin and the 20-30% losses we typically take and make back buying longs would cause their investors to flee bankrupting them.
Strategy implications
Selling naked longs
Credit spreads
Debit spreads
Edit: For what to do with your cash position, you could put it into gold, bonds, bond etfs, non spy correlated stocks or whatever. Low risk theta gang strats are fine in bull markets but don't expect to make real money from them. I'm cash since volatility is high, u do u.
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FinMod 13B Options Greeks and Delta Hedging - YouTube Option Greeks Introduced  Delta  Gamma  Theta  Vega  Rho Binomial Option Pricing: Tutorial on Delta Hedging - YouTube Delta hedging a gamma scalping Delta Neutral Option Strategy - Short Straddle with Delta ... Hedging (aka, neutralizing) option delta and gamma (FRM T4 ... Delta Hedging Explained  Options Trading Lesson - YouTube

Delta hedging is an options strategy designed to eliminate directional risk. This is a great way to focus on and profit from other market factors such as implied volatility or time decay. Learning about Delta hedging and when to apply it can be a great asset for traders of any kind. With that being said, Delta hedging also has its shortcomings ... Delta-gamma hedging is an options strategy combining delta and gamma hedges to reduce the risk of changes in the underlying asset and in delta itself. But in this article, we will attempt to explain delta hedging strategy and delta hedging vs. gamma scalping in as plain of terms as possible. Delta Hedging Explained. In this delta hedging tutorial, we will talk about the basics, and do so in the simplest possible language. First, let’s talk about how delta is defined. We can do this with a simple example. Imagine that you hold a particular ... Strategy Contest ; Analytic Contests ... about from a retail perspective. That is Delta and gamma hedging in the spot FX market. Firstly we need to define these, and in the least mathematical way (to keep it simple) Delta - the change in value of the derivative compared to the change in price of the underlying asset. Delta can be expressed in a few ways, but in the FX markets it will normally ... Gamma: The Twin of Delta Alright, up to this point, I hope the concept of delta does not sound as alien to you now. The next critical piece of the jigsaw is understanding what the heck it means ... Gamma Addresses Delta Hedging Errors Caused By Curvature Delta Hedging is an options strategy that aims to reduce the risk associated with. 25-delta rolling put strategy in an effort to reduce long-term costs. Delta may accelerate. For most cases however it will at least be a better approximation than a standard Delta-hedge even in the case where the trading is done discretely. 4 Delta =-5000 ... Delta is not constant, and as the EURUSD rises the delta changes (this relationship is defined by gamma). Once again quoted in %. For example the same option above with a delta of 25% (€1,000,000 value) might have a gamma of 10%. This means that for a 1% change in the EURUSD the delta changes by 10%. So if the EURUSD rises by 1% the delta moves from 25% to 35% for example.

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FinMod 13B Options Greeks and Delta Hedging - YouTube We describe the delta hedging approach to price an option using a one period binomial tree model. The approach can be easily extended ... Keywords:Option greeks, option greeks explained, option greeks strategies, option greeks , option delta, option delta explained, option delta gamma theta vega rho, option delta trading strategies ... [my xls is here] To hedge options Greeks, we want to rely on the formula: +/- Quantity * %Greek = Position Greek, where a short posit... Delta neutral option strategies are essentially volatility trades. In a short volatility example, traders want to maximize their time decay whilst simultaneo... Webinár o podstate a použití delta hedgingu, gamma scalpingu a reverzného gamma scalpingu. Get one projectoption course for FREE when you open and fund your first tastyworks brokerage account with more than $2,000: Black-Scholes Option Greeks and Delta Hedging Strategies and simulation.