# Hedging across global sessions

**DL-13 · Dealer Logic · Core**

**Lesson question:** Why does an overnight move matter to the next option session?

Original fictional examples; educational writing, not live market data, orders or production approval.

## By the end

- Explain the mechanism in the lesson question.
- Reproduce the worked comparison and recognize its failure case.

**Prerequisites:** DL-01

Linked products have different schedules. Futures can incorporate overnight information while many individual-stock options are less available. Some index options have extended sessions, so the exact product calendar must be identified.

An overnight move changes sensitivities of existing inventory but does not reveal what inventory remains at the next open.

## Understand the mechanism

Gamma, time and IV assumptions can alter the book's opening Delta. A broad futures hedge may manage part of that exposure, but individual-company jumps and basis remain.

Asia and Europe supply observations and different liquidity; they are not direct measurements of U.S. dealer holdings.

## Walk through the process

Record the estimate's timestamp and recompute at the new state. Distinguish hedgeable broad exposure from idiosyncratic risk. At the cash open, update with actual option prices and new flow.

A large move may require full repricing instead of a fixed-Gamma approximation.

## Evidence boundary

The arithmetic is original conditional teaching material, not a measurement of current dealer positions. The cited Cboe research is historical product-specific evidence, not a live inventory feed. Model outputs should remain distinguishable from observed market facts.

## A worked example

A fictional book has +100 dollars per point-squared of Gamma. A +5-point overnight move adds approximately +500 dollars per point of Delta. With a matching 50-dollar-per-point future, neutralizing that increment means selling ten contracts.

The example assumes unchanged inventory and a matching index. If either fails, the numerical implication no longer represents the same book.

## Graph: Hedging across global sessions—worked comparison

**Horizontal:** Index point change  
**Vertical:** Incremental futures hedge contracts

Fictional data from the written example. The chart organizes the comparison; its shape is not a forecast.

Complete numerical data are embedded in `scripts/dealer-logic/DL-13.js` and displayed as an accessible table in the HTML lesson.

## What would invalidate the reading?

A stale close-based allocation can miss new trades and overnight hedges. A broad-index future cannot eliminate single-company earnings risk.

## Check your understanding

### How many extra short futures offset the example's +500 dollars/point increment?

**Answer:** Ten at 50 dollars per point.

**Why:** 500/50=10, with opposite hedge sign.

### What is the critical failure to avoid?

**Answer:** A stale close-based allocation can miss new trades and overnight hedges. A broad-index future cannot eliminate single-company earnings risk.

**Why:** Explain this risk before treating the example as a decision rule. A correct calculation does not guarantee a favorable market outcome. **Critical risk check.**

## Takeaway

Return to the question: Why does an overnight move matter to the next option session? State the observed facts, the assumptions and the failure condition separately.

## References and provenance

The cited references support definitions and conventions. The teaching prose, tickets and numerical scenarios are original; they are not attributed as historical market observations.

- [OIC Greeks](https://www.optionseducation.org/advancedconcepts/understanding-options-greeks)

- [Cboe 0DTE positioning study, May 2025](https://www.cboe.com/insights/posts/0-dt-es-decoded-positioning-trends-and-market-impact)