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Az di bobe volt gehat beytsim volt zi geven mayn zeyde. If my grandmother had balls she would be my grandfather. --Yiddish proverb

What you are saying is a general "feature" of risk premium - the cheaper the convexity in absolute sense, the more relatively rich it is. Something to keep in mind.

ROFL!!!!

qua definitione, selling something expensive and buying something cheap would, in general, tip the odds in your favour. You do, however, need to predict if the "inflated options" are truly rich or they are just pricing in some upcoming events. In general, shorting risk premium is a positive...

Fight night! Can I have some pop-corn, please?!

Actually, that does make perfect sense given how cleanly it was executed.

Puts or calls? Also, how do you know what is the market maker position - open interest will only tell you the outright contracts, not the direction.

To be fair, I did not see anything about VIX in the above posts. Personally, I think the OP does not understand the basic mechanics of the options market (and the actual market making process), but I might be wrong. Very interested to see a real life examples of "market maker collusion":D

Royal Bank of Canada (RBC). They were doing a fair bit of fixed income relative value and equity volatility arbitrage, very smart guys. Pretty sure they will lend elsewhere or will be able to raise some capital, just like many former bank prop desks.

Yup. A few possibilities that produce a very expiration risk profile. The two main buckets are - I might have VIX futures vs variance, in this case I'd want to collapse it into the strip vs variance; conversly, I might be carrying long or short ATMish options against the strip and play the BE...

You have a number of choices, each one presents it's second order risk that just might kill you. The general thought is that you can either combine options along the term structure (bad idea in this case, as TS will react to the earnings passage) or combine options along the strike space...

Well, apparently, the market has changed and now you are not the hot stuff anymore. Have you thought that maybe your strategy has been arbed away by HFT? I seriously doubt anyone is arbing/front-running you unless you are doing something remarcably stupid. Hell, I am not in that business, but if...

(a) Delta hedging transforms terminal distribution risk into path-dependent volatility risk. This means that at a certain price (i.e. at some level of implied vol) any MM (or other vol player, e.g. myself) would be happy to be naked short or long an option. The residual risk is the convexity...

I don't even know where to begin, seriously. "Run Forrest, run!" (a) If you are an "experienced option trader", you should have an idea on how MMs run their option book. It's all about building a positively accruing book with good relative value plays. Delta hedging is a major part of it and...

Well, I am an experienced options trader and I do think the whole world is out the get me. Not in terms of options trading, of course, but in every other aspect of my life.

What you percieve as "price fixing" is simple feedback from delta hedging, if anything it's bad for the MMs and good for the ouright traders. If every vol player is long gamma against an outright seller, big moves will be quickly reversed, volatility would be muted and the underlying will...

how about you write a spreadsheet and see how the weights work ? :) This said, new settlement process gives the exchange discretion to exclude trades at really low strikes so now it's harder (you actually have to be a proper player, we are not talking spending 20k but rather 200k). meanwhile...

Given how the strip pricing is translated to the VIX print, it's fairly easy to manipulate the print up "in the course of bona fide market making activity". Been there, got a T-shirt.

Not really true. Being a PM is the most lucrative spot at a fund (obviously besides being an equity partner). Finance is profession with no real barriers to entry until to get to proper elite levels. If you don't distinguish between institutions, you will get a diverse population that has...

To be read in the right order: (first) Options Trading (second) Volatility Trading (third) Options Market-Making (fourth) Dynamic Hedging my 0.25 vega