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> The first five can't lose much in value Allow me to introduce you to my friends, OTM and theta...
by graerg 6y ago
> The first five can't lose much in value
Allow me to introduce you to my friends, OTM and theta...
- qeternity 6y agoI’m not sure what OTM has to do with anything and theta is certainly not the driver here most of the time (except at expiry when theta decay drives hedging). This is gamma. Pure and simple. The double edged sword of convexity.
- graerg 6y ago> I’m not sure what OTM has to do with anything The user I quoted claimed amateurs aren't going to lose money chasing FAANG hype, which is arguably reasonable if they're holding the underlying or even buying ITM options, but they seemed to forget that a lot of retail traders are burning money on OTM options that will most likely got to zero.