unturnededge

25/26 Good single-stock MM feels close to the company calendar and the stock tape. Good index MM feels like living inside the macro calendar, futures book, vol surface, and correlation matrix at the same time. 26/26 The trap: thinking index options are safer because they are diversified. Diversification reduces idiosyncratic risk. It does not remove crash risk, correlation risk, settlement risk, or the pain of being short convexity.

24/26 The practical question in AAPL: “can I survive the name?” The practical question in SPX: “can I survive the whole street doing the same hedge?” One is idiosyncratic risk. The other is correlation and crowding.

Most people think index option MM is just single-stock MM at bigger size. Wrong. SPX is a correlation book with a clean hedge. AAPL is an event book with messy delivery risk. Same Greeks, different job. A thread 🧵