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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: mishedlo who wrote (30604)2/17/2002 1:43:50 PM
From: jjs_ynot  Read Replies (1) of 99280
 
Mis,

Delta-Hedging happens all the time. Option market makers hedge their position within minutes of putting on the position. It is not clear to me how delta-hedging amplifies a move one way or the other. The short-stock happens as soon as a retail investor buys a put.

The goal of an option market maker is to keep his "book" delta-neutral and gamma-positive. That is why stocks are preferred to other option strikes, since you can balance the delta without degrading your gamma position.

Regards,

Dave
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