Who is buying my "leaps" sell to open...

C

Cabin111

With many stocks at this time highs, I am selling Jan 22 leaps on a lot of stocks (covered calls). These are quality stocks (Boeing, ADM, QQQ), and I seem to be getting a high premium for them.

So who do you believe is on the other side of these trades?? Is it investment banks, private equity funds, money from other countries, pension funds, individuals...??

Are they holding to expiration or getting out of them part way through??
 
no you don't understand the concept of what market makers do. It's called delta neutral dynamic hedging but it would take me too far to explain it
 
cvds16 said:
no you don't understand the concept of what market makers do. It's called delta neutral dynamic hedging but it would take me too far to explain it
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I think I understand, that they would cover against it. It reminds me a bit like years ago (and even now), when Morgan Stanley would buy stocks cheap...Push them on their clients and be the market makers. The only difference is that this is with options...
 
no you still don't understand: there is a world of diference: option market makers 'replicate' options dynamidally to hedge against their position. They don't care whether you buy or sell options, their most important worry is the vol at which they are buying or selling. They have big positions spread across different strikes so vol is a relative term.
 
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