# Why are netted positions more volatile?

According to John Gregory, "netted positions are inherently more volatile than their underlying gross positions". Given the context, I think he's talking about close-out netting and not payment netting.

I can't figure out why the netted position would be more (or for that matter less) volatile.

• For more context you can see the passage in Gregory's book Central Counterparties here books.google.com/… Sep 14, 2015 at 0:11
• A number which is equal to the difference between two large positive numbers will usually be pretty volatile and erratic (or example it can easily change sign). Maybe it is as simple as that. Sep 14, 2015 at 2:40