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When you buy a call from an option trader, you're long the stock, trader is short, so they will buy shares to hedge themselves.
by FabHK 6y ago
When you buy a call from an option trader, you're long the stock, trader is short, so they will buy shares to hedge themselves.
- freeone3000 6y agoThey often do, but they don't have to. You can write an uncovered call, if you're brave or stupid -- after all, worst case you'll just market buy the shares to deliver on the day the option is tendered.
- lazyasciiart 6y agoNo, worst case is nobody is selling shares on that day. Thats the exact scenario wsb is hoping to create.
- freeone3000 6y agoLiquidity providers can always just write share IOUs and find the shares to fill them later. The market running out of stock is not a thing that can actually happen.