What is exact way of traders to use the gamma to calculate
What is the exact way of traders to use the gamma to calculate?
Expert
Traders use the gamma to calculate how much they will have to rehedge by when the stock moves. The stock moves with $1 so the delta changes by anything the gamma is. But it is only an approximation. There delta may change by more or less than it, especially when the stock moves by a larger amount, or say the option is close to the expiration and strike. Therefore, the use of speed in a higher-order is Taylor series expansion.
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