Ask the Institute

DATE:  April 16, 2012

QUESTION:

Can you explain the process of Gamma Scalping and how it works?

ANSWER:
Gamma Scalping is the practice of buying and selling stock in order to reduce unwanted directional risk in a position.  The Gamma Scalping process begins with a position that has a delta of zero, like a straddle or strangle, but has a relatively high level of gamma.  To learn more about the process of Gamma Scalping, view this week's segment of "Ask the Institute."