Wednesday, October 5, 2011

how and when operators drop their options?


abhijithji,
you have asked

(how operators squareoff their position?
will they squareoff daily or hold till expiry?)

this is a million dollar question.

in my opinion,
operators never square-off their positions.

they just respond to the square-off offers (or requests or begs) from retail traders.

more aptly put,
they just create circumstances for retail traders
to surrender their calls and puts
at loss or at premiums.

when operators are happy to see the request, they charge premium
when they are not happy, they charge hefty premium.

rest of the time
they let out-of money options expire and fall in their mouth like grapes.

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