MLM COMPANY Derivatives Trader Interview Questions and Answers

Short gamma refers to a position where the gamma of an options portfolio is negative.

• Short gamma means that the options trader will lose money as the underlying asset's price moves.

• It is the opposite of long gamma, where the trader profits from price movements.

• Short gamma positions are often used by market makers to hedge their exposure to price movements.

• Example: Selling a call option without owning the underlying ass

Delta is the rate of change of an option's price with respect to the underlying asset's price. IV is a measure of the market's expectation of future volatility.

• Delta measures the sensitivity of an option's price to changes in the price of the underlying asset. For example, a call option with a delta of 0.5 will increase by $0.50 if the underlying asset's price increases by $1.

• IV (Implied Volatility) reflects the market...read more