Some thoughts about ETF hedging; feel free to leave comments!
An investor sells 1M ETF shares to a Market Maker(MM) at bid price. MM has a long position and will need to offload the shares bit by bit. How does MM hedge its position prior to the long position? My guess will be using option - MM has a positive delta and therefore needs a put option to bring down the +ve delta.
An investor wants to buy 1M ETF shares from MM. Is there any hedging strategy involved in this case? If so how?