There is a new buzzword in town: ‘Gamma Flip’. It is used to explain (due to a lack of any sane explanation for current market behaviour) why the S&P seems stuck at practically all-time highs and what might happen if things turn bad. In fact, it is so hot that even TV pundits are elaborating on its potential advantages and dangers. But what exactly is it?
Learning Greek
Gamma as a thing has been around since traders began to use options to hedge, speculate, and mitigate risk. But it was not until the shiny Black-Scholes model emerged in the ‘70s that anyone knew what to call it. Bluntly, gamma is the first derivative of the option delta and describes the sensitivity of the delta in relation to price movements of the underlying security. A flip is the transition from a prior (in this case positive) state, to its opposite (now negative) state. For many that’s hardly an eloquent answer, nor even a particularly explanatory one. Of course, there is a far easier way of describing gamma (and the potential flip it implies), but to reveal it would rob derivatives experts of their inordinately rotund paycheques… Luckily for you, nobody is paying me to be pretentious anymore.
lot more,,,,,,,,,,,
http://www.zerohedge.com/markets/whats-gamma-flip-and-why-should-you-care?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
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