Zeev's Turnips Patch-No Politics (ZEEV)

[hk2]

If there is already a ton of money on the long side, hence the large number of call contracts, why would they worry that the stock would continue up after they short it?

When you sell a call contract, you are effectively going short. So you short the underlying to hedge your position.

You worry that it will continue going up because it's already gone so far against you, you'll never break even by OE. This is when the call buyers win and the call writers lose. So ALL the call writers are buying the underlying to minimize their losses.



From the way it's explained here, delta hedging always involves buying.


Only because it's most applicable to our current condition.
In a strong downtrend, the hedging happens in the opposite direction, and prices continue downward.