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?
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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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