Dealer Hedging and Options Greeks Breakdowns

In this video I break down the meaning behind the most important options greeks and how they impact market maker decisions to hedge. There will be many follow up videos to this in the future to show practical ways on how we can apply this knowledge.

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[FattyTrades]

Hey all, sorry for the audio being bad in this one... error on my part. At some point I'll get around to re-recording but this will be present in follow up videos.

[holyearth]

Excellent video and everyone who plays options needs to watch this!

[craziedde]

I'm surprised how much work you put into your videos...

[nycbankers]

I’m m so glad i found you bro thank you i been looking all over youtube for exposures i'm glad i've found you

[scrubly_jr]

incredibly helpful - this is invaluable information for a novice options trader like me!

[trocchiettoski]

great video, i can't believe you are so good and do not do it as full time job. This Tradytics tool is amazing and you explain as a good the market structure from the big guys side. thanks

[jarrodwalker]

Thanks KFatty, You know there's a Bad Mother-Fer out there who has a bunch of questions for ya

[codedbyshoe]

Awesome video went way more in depth than what I have seen before. Looking forward to seeing how we can use tradytics to help gauge these rallies and put bottoms

[arshamight]

This is amazing information. Thank you so much. Do you recommend any books that explains this more in detail? Big thanks again

[rdyvptnm]

such a great video . may i know how did you learn all these topics? did you do your major in finanace ?

[mromand]

Hi, one question: I guess the picture of Vanna in minute 16:00 is not correct. I mean: Customer is LC, Dealer is SC, means Vanna is negative (it implies that if IV rise then Delta decreases). So, if Dealer is SC and IV rises (market goes down) Delta decreases, then the Dealer has to SELL back the shares previously bought.... (instead of BUY as the picture says....) it´s that correct?

[jody]

??? Am I missing something here? Your slide at 29:31 is incorrect! It's the other way around. IV increases when liquidity is inadequate caused by customers buying options, and decreases when liquidity is replenished as customers short and dealers buy adding liquidity to the market. Why do you think short squeezes occur when dealers are short put options, IV increases, the market drops quickly, and the dealers have to keep selling which feeds even more selling until finally a bottom is reached, and the market finally springs back when the dealers have to cover their shorts and start massive buying back. Or why markets rising with low IV are orderly because customers are selling call options to the dealers creating a liquid market in which dealers keep it orderly by buying dips and selling on upswings as they hedge their deltas. Again, am I missing something here? What I said is part of the Squeeze Metrics paper "The Implied Order Book" that has the gamma/delta curves illustrations you scanned for this video. No?