What is Delta Hedging - Ultimate Guide Trade Options With Me

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
Longs
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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Delta Hedging Explained  Options Trading Lesson - YouTube Erklärung Delta, Gamma, Vega und Theta für Optionen FinMod 13B Options Greeks and Delta Hedging - YouTube What are the Option Greeks?  Hedging Options  Risk Managing Options Options 82. The Greek Letters-9: Delta, Gamma and Vega Neutral (recorded on 20181221) Hedging (aka, neutralizing) option delta and gamma (FRM T4 ...

The trader will engage in the buying or selling of the underlying asset (gamma scalping) in order to recalibrate its delta to keep it neutral and make profits along the way to compensate for theta ... The risk on a theta portfolio is Gamma which measures the speed of direction or delta. With major economic reports we can expect increases in gamma and Vega which if it goes in the wrong direction can really mess up your theta trades. A typical hedge is for the trader to Identify the negative gamma in the portfolio and buy enough straddles on the SPY or other market index ETF to offset the ... 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. Hedging delta when gamma is positive. Discussion in 'Options' started by XCoinr, Dec 2, 2019. 1 2 3 Next > XCoinr. 7 Posts; 0 Likes ; If I have an aggregate position with a positive gamma, should I still be delta neutral? I feel like I'm giving up the positive benefits of being gamma positive because I'm killing my delta constantly. #1 Dec 2, 2019. Share. samuel11. 512 Posts; 199 Likes; It ... Gerade beim sogenannten Delta-Hedging ist diese Kennzeichen von großer Bedeutung. Ein Theta ist die Aussage über die Veränderung des theoretischen Wertes einer Option, wenn sich die Restlaufzeit um einen Tag verkürzt, dabei jedoch alle anderen relevanten Größen gleich bleiben.. Für Optionsinhaber ist das Theta in aller Regel negativ. Delta, gamma, vega, and theta are known as the "Greeks", and provide a way to measure the sensitivity of an option's price to various factors. Gamma Hedging & Theta Hedging. In similar fashion to Delta hedging, you can also apply this concept to other Greeks such as Gamma or Theta. Instead of offsetting the directional risk of a position, you can offset Gamma or Theta risk.

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Delta Hedging Explained Options Trading Lesson - YouTube

Delta, Gamma, Theta, Vega - Options Pricing - Options Mechanics - Duration: ... The Power of Options Delta When Trading (What Is Delta) - Duration: 7:42. Profits Run 86,738 views. 7:42 . 4 Most ... [my xls is here https://trtl.bz/2HjdxQq] To hedge options Greeks, we want to rely on the formula: +/- Quantity * %Greek = Position Greek, where a short posit... Black-Scholes Option Greeks and Delta Hedging Strategies and simulation. Get one projectoption course for FREE when you open and fund your first tastyworks brokerage account with more than $2,000: https://www.projectoption.com/fre... what is delta gamma theta vega in options. Category Education; ... Hedging (aka, neutralizing) option delta and gamma (FRM T4-19) - Duration: 14:44. Bionic Turtle 4,006 views. 14:44 . How to Trade ... Options 82. The Greek Letters-9: Delta, Gamma and Vega Neutral (recorded on 20181221) Based on “John Hull, Fundamentals of Futures and Options Markets, Prentice-Hall, 9th ed., 2016”. TA ...

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