NorthWest Biotherapeutics Inc (NWBO)

[gnawkz]

Typically, when it comes to options, almost all trades execute with a "Market Maker" firm as the counter party. These firms are responsible for ensuring the security stays as liquid as possible.

http://en.wikipedia.org/wiki/Market_maker

These are the firms that ensure your options trades will settle EVEN if no counter parties exist to take the other side of the trade when you place your purchase/sell order. When these trades occur, good Market Maker firms will execute corresponding transactions that will ensure the overall portfolio continues to stay as close to "Delta Neutral" as possible.

http://en.wikipedia.org/wiki/Delta_neutral

Generally, these firms will be employing significantly advanced portfolio hedging strategies.

For example, to hedge against selling a Long Call, the firm COULD be executing a short term "Covered Call" transaction with another individual. If the Covered Call options gets called, the Market Makers buy the stock and transition into a long term Covered Call option position.

The above is just a VERY simplified potential hedge and probably rarely executed.

Now ... if the overall demand for the underlying equity is minimal and volume is not significant enough, then Market Makers don't even allow Leaps to be traded. NWBO Leaps were not added till sometime in 2014 if I recall. Prior to that, the 6 month option was the farthest out option that could be traded for NWBO.

This is my general understanding of how things work. It is obviously simplified, so if anyone out there feel that I have skipped over details that should've been shared please add.

Thanks