@moo
GM.
Good Algo Monday for everyone.
What are delta-hedged and gamma-hedged positions? These terms are used in option trading, but can be applied to some degree to other crypto trading as well (perps, staking, etc.)
Delta means you are neutral to the price movements of the underlying asset, e.g., ETH. Usually, this is done by having both long and short positions open at the same time. Typical is long spot ETH, short perps.
Gamma is neutral to the *speed* of the price movement of the underlying asset. Because for a delta neutral position, you need to constantly rebalance it (with a cost). If crypto price moves fast enough (volatility spike), you cannot rebalance your delta neutral fast enough and you get expose due to bad trade execution.
More here:
https://tradingstrategy.ai/glossary/delta-hedged
https://tradingstrategy.ai/glossary/gamma-hedged