Equity Derivatives Trader Question
How do equity derivatives traders hedge their client's positions, and i guess more generally what does an equity derivatives trader do (besides the obvious of trading equity derivatives)
Go into the market, go OTC against another client to net out some risk. The stuff they don't hedge they warehouse.
HF A sells me 10K ATM NVDA calls, I sell 5K of them to another desk, delta hedge 2K of them, and sell another bit of the OTM's instead of netting the ATMs because I like the risk profile.
The main thing I'm watching position-wise is how much theta I pay a day, how much Vega exposure I have, and how quickly the position's delta moves when a 1% move happens i.e., my gamma risk.
I'm on a different product, but this is our thought process.
Iure exercitationem aspernatur nihil reiciendis voluptatem. Ratione est quasi quia iste quos beatae cum. Perspiciatis quaerat et earum iure. Voluptate reprehenderit quidem tempore vitae eius et labore.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...