Does a Flat Book Mean the Market Maker Has No Risk Exposure? ⎊ Path

Does a Flat Book Mean the Market Maker Has No Risk Exposure?

No, a flat book primarily means the market maker has minimal directional (Delta) risk. They are still exposed to other risks, most notably volatility risk (Vega), Gamma risk, time decay risk (Theta), and execution risk (slippage, counterparty risk).

A flat book is not a risk-free position.

Does a Delta-Neutral Portfolio Eliminate All Risk?

Why Is a “Gamma-Neutral” Position Not Necessarily Risk-Free?

What Is the Main Drawback of Using Delta Alone for Hedging a Large Options Portfolio?

How Does a ‘Greeks’ (Delta, Gamma, Vega, Theta, Rho) Measure Option Price Sensitivity?

What Is the Relationship between a Flat Book and the Bid-Ask Spread Offered?

What Is a ‘Delta-Neutral’ Portfolio and Why Is It the Goal of an Options Market Maker?

How Does the “Greeks” (Delta, Gamma, Theta, Vega) Apply to a DAO’s Options Trading Strategy?

How Can Options Traders Use the “Greeks” (Delta, Gamma, Theta, Vega) to Anticipate Potential Gamma Squeezes?

Glossar

Market Maker

Agency ⎊ A market maker in cryptocurrency derivatives functions as a principal, providing liquidity by simultaneously posting bid and ask prices for contracts, notably perpetual swaps and options.