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Devin Anderson – Strategy versus Structure in Tail Hedging (S6E14)

Flirting with Models

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The Importance of Replication in Options Trading

Devin Obeidallah: Why bother trading options at all? Why not just delta replicate the options using something like futures overlay on a client account and avoid a tremendous amount of headache? He says convexity with respect to spot is the better level of value for now. If we went through a big deregulation cycle and a slightly different monetary policy regime, could that change? Sure. And we'll have to adapt if it does. But for now, we think this is the way to go.

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