Quote from atticus:
Natural buyers won't become sellers simply because it requires less capital to do so.
The equity option markets are dominated by institutions. PM was enacted to reduce hedging requirements. Of course, the flip-side is a reduction in unhedged positions as well. Sure, it will raise vol on price shocks.
Look at how many option questions in ET and you'll understand the exp growth in option volume is coming from retail. Don't get me wrong. It is still dominated by institutions, but it is changing. With pm, it changes a lot quicker than you imagine.
