3 ms·
One side of a trade can be a gamble and the other a hedge. A single transaction doesn't need to be classified as a gamble or hedge - it can be both. As for the
by danielmarkbruce 2mo ago
One side of a trade can be a gamble and the other a hedge. A single transaction doesn't need to be classified as a gamble or hedge - it can be both.
As for the market maker themselves - they are definitely not gambling. They are trying to make money while reducing risk to the extent possible. You don't walk into the risk management committee and get an excited response because you increased risk all else equal, right?
- wpietri 1mo agoYou started out saying it was simple, but now you have a definition where you need to somehow slice trades down the middle, so I think you're starting to see my point. Having worked for market makers, I find it weird to get lectured on what they really are. That never goes down well, but especially not when the lecture is wrong. https://xkcd.com/793/ https://xkcd.com/793/