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Thank you for the explanation!

Very informative paper! Thank you for sharing this.

So if I am understanding this correctly, the MM is essentially hedging all calls/puts, irrelevant of whether the option was opened as covered or naked? Sorry if I am misunderstanding, still trying to grasp it all.

Thank you both, makes sense. It gets confusing for me to understand with larger institutions and market makers being included in the mix. I am trying to understand the delta hedging process, but I don't understand how often this is done vs just having covered options from the creation of the...

Sorry for not clarifying. As an example: Open interest on SPY call, strike price of 450 is 16,280. Out of those 16,280, how do I know how many of them were sold (originally) naked or already covered? Is there a way to know this? Is there an average ratio that tends to play out like 1:1...

I Have been learning a bit about options, and a question that keeps coming to mind is what the ratio of naked to covered options is? This information doesn't seem to be available as a metric anywhere and I was wondering if there is a reason for that?