Why does managing positions earlier reduce portfolio volatility?
Gamma risk is one answer. But to be more intuitive, we can look at how a stock moves over the course of a trade held to expiration versus how much a stock changes when the position is managed early.
We find that the stock moves (on average) a lot less over a 22 day period than a 45 day period. This translates to lower portfolio volatility because you are less exposed to directional movements.
Tune in as Tom and Tony expand on these takeaways.