I agree it is a good way to lay off risk.

But any time you want to lay off risk the person on the other side of the trade is expecting to make money also.

Just saying, understanding how markets actually works lets a person better assess if the cost of laying off risk is worth it or just giving another market participant a portion of your profit.

I have never known anyone to take on risk for free. If it is not free there is a cost to it. If it is a cost then it affects net profit.

Laying off risk a person on can't afford to take is good business. But risk is part of the business we are in. Lay off all the risk and likely you have also laid off all the profit potential.

If a person can stand taking the risk themselves and is consistent in execution (to capture the averages - win some, loose some), there is likely net profit available that otherwise the risk being sold (pay someone else to take it) would be a cost.

I have been told to not over think marketing. But sometimes understanding how something works is not a bad thing. The person on the opposite side of the trade expects to make money just as much as we do. Laying off risk is not free. It is a management tool with a cost associated.

John