Teach Me Like I'm Five: Investing Concepts Made Simple
Teach Me Like I'm Five: Investing Concepts Made Simple
Podcast Description
We’re on a mission to make investing concepts simple. In each episode, we bring in an expert to help us break down a key financial idea—whether it’s a rule of thumb, a market principle, or a tool investors use every day. We ask the questions you might be afraid to and focus on clear, accessible explanations that anyone can understand. If you’ve ever felt confused by financial jargon or just want a better grasp on how things really work, you’re in the right place. We’re learning right alongside you—one concept at a time.
Podcast Insights
Content Themes
The podcast focuses on key financial ideas such as options trading, market principles, and investment tools, with episodes like 'The Hidden Logic of Options' that explains put-call parity using relatable analogies and 'Decoding Volatility with the Rule of 16' which breaks down volatility concepts for practical trading applications.
We’re on a mission to make investing concepts simple. In each episode, we bring in an expert to help us break down a key financial idea—whether it’s a rule of thumb, a market principle, or a tool investors use every day. We ask the questions you might be afraid to and focus on clear, accessible explanations that anyone can understand. If you’ve ever felt confused by financial jargon or just want a better grasp on how things really work, you’re in the right place. We’re learning right alongside you—one concept at a time.
In this episode of Excess Returns, Matt Zeigler sits down with Kris Abdelmessih and Matt Cashman to break down one of the most important — and often misunderstood — concepts in options: gamma. They explore what gamma really is, how it interacts with delta and theta, why gamma scalping (a.k.a. delta hedging) matters, and what both individual traders and professionals need to know about it. If you’ve ever wondered how options traders actually make money from volatility, this is your guide.
Topics Covered
Why understanding gamma is critical to options trading
The relationship between gamma, delta, and theta
Using physics and middle school math to explain gamma’s role
How gamma P&L works and why it creates curvature in returns
Where gamma “lives” (at-the-money vs. in/out of the money, short vs. long dated)
The mechanics of gamma scalping and delta hedging
Why option trading is really volatility trading
The practical applications for retail traders and professionals
Common misconceptions about “income from options”
Timestamps
00:00 – Why gamma matters in options trading
02:22 – Defining gamma and its sensitivity to price moves
05:04 – Practical explanation: delta vs. gamma
09:00 – Physics/acceleration analogy for gamma P&L
18:00 – Mapping acceleration math to options gamma
23:30 – Where gamma lives: at-the-money and near-expiry options
29:00 – Introduction to gamma scalping (delta hedging)
36:00 – When gamma trading works best (volatility path dependence)
41:00 – Real-world applications for individuals and professionals
47:14 – Why selling options isn’t “guaranteed income”
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