← Charlie Yan

Working paper · 2026

A Formal Theory of the Delta-Matched Risk Reversal

The structure is near-pure differential vega. Vanna is the tax on the harvest, not its source — refuting the standard vanna-centric account.

Headline result Attribution as shares of net: +128% slope vega, −59% vanna, +59% θ−γ carry, −19% residual level. Closes to 100% exactly.

A delta-matched risk reversal is a near-pure differential-vega instrument carrying an irreducible vanna coupling. The vanna term is the tax on the harvest, not its source.

Slope-share sign stability runs 99.7%; the vanna share’s interval marginally includes zero.

Reproducibility

Partially runnable. The bootstrap needs a persisted daily bucket series derived from licensed data and not shipped, but the script is published so the interval construction is auditable: block bootstrap, 5,000 draws, 21-trading-day blocks.

What is deliberately withheld

Operating parameters of the studied strategy — entry bands, holding and exit rules, sizing. The structure and its Greek attribution are published; the trading rules are not. Two further analyses depend on a private data-access layer and are not shipped rather than shipped broken.

derivatives · Greeks · volatility skew