Glossary / Dealer hedging

Dealer hedging

The underlying buying/selling market makers must do to offset the options they sold.

Dealer hedging is the buying and selling of the underlying that market makers must do to neutralize the risk of the options they've sold. It's the mechanical driver behind gamma pinning: near a large wall, every tick forces offsetting flow that pushes price back toward the strike.

More terms: Gamma wall · Delta neutral · Gamma · 0DTE options · Call wall · Put wall

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