19 June 2022 21:17

How do I hedge stock options like market makers do?

Options market makers try to avoid risk as much as possible. One way they hedge is to look at the delta of a call option just purchased and sell an appropriate amount of stock to hedge. Conversely, if they sell a call, market makers will hedge that with a long stock position.

How do market makers think?


Quote: And the ask price that's what a market maker is trying to do at the end of the day and the only way they can do that is to have as many transactions as possible. So remember a market maker.