3 ms·
No. It's a lot more complicated than you buy a call option and the brokerage buys 100 shares immediately.
by onlyrealcuzzo 6y ago
No. It's a lot more complicated than you buy a call option and the brokerage buys 100 shares immediately.
- 0xB31B1B 6y agoYea, but we’re describing the basic mechanics of what’s happening, we don’t need to get into the details of delta hedging. The basic mechanic is that large groups of folks buying Out of the money calls results in the sellers of those options buying shares to offset risk in the trade. In effect, in an env where lots of shares are locked up due to shorts, an cash efficient way to cause a squeeze is to buy out out of the money options, causing more shares to be bought to offset risk, sending the price up.