Submitted by hardyrekshin t3_z7kk8z in wallstreetbets
hardyrekshin OP t1_iy9n7aw wrote
Reply to comment by prophylaxis6 in 2022-11-29 Wrinkle-brain Plays (Mathematically derived options plays) by hardyrekshin
It's not that simple.
At its core, the premise is that the price touches some important level, and then reacts off of that level.
If there's a consistent pattern, then there's an edge which can be traded.
The part about market makers' sensitivity to gamma is more an attempt to explain why the phenomenon exists. Not a confirmation of the phenomenon.
prophylaxis6 t1_iyal4tb wrote
Do you have any readings or videos you could refer to me to learn more?
hardyrekshin OP t1_iyapxc5 wrote
Options Futures and Other Derivatives by John C Hull (7th ed or later)
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