3 ms·
This is not quite how things work. Market makers don’t just take risk and not hedge. They would have hedged deltas (by shorting stock) and gamma/vega by selling
by qeternity 3y ago
This is not quite how things work. Market makers don’t just take risk and not hedge. They would have hedged deltas (by shorting stock) and gamma/vega by selling other stuff (or this offset stuff they had sold previously). Impossible to say whether an MM would have made or lost money but usually gap moves like this cost MM on a net basis.
- theogravity 3y agoYou're right, and it's something I should have mentioned.