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The concept of notional value is more complicated than that. Dealers don’t hedge the full notional value they hedge only enough to cover the delta and gamma on the option.

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True but at the current high implied volatility of the affected symbols the delta/ gamma has been high —> lots of hedging needed. Big loop.

Correct, but not 100:1 hedging.

In addition to that, they match orders in real-time, so they might not even need to hedge partially because they have offsetting positions coming in.

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