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Friday, October 19, 2018 1:57:51 PM
that being said, market makers always hold shares against option positions when they have a decent size on (for this stock, anything over a few hundred options would be a decent size and i assume many market makers have 100s if not 1000s of inventory). if they do not hold shares against the position, the do not get as much margin from the exchanges, which is the main way MMs make money (convince their clearer they "trade flat" so theres little risk).
As of yesterday, they would have held almost 100 long stock for every 19 call they were short. as we move down, they are forced to buy back shares. concept is called "gamma" in the trading world.
similarly, if they are short the $20 call and we are above the strike, they have to hold long shares. and below the strike less and less long shares. they are constantly (buying high, selling low, being short options, but they believe the premium they collected to do this is worth while).
believe it or not, if you buy a $20 call when were trading 15, we go to 25, then back down to 15, both you and the person who sold you the call will probably lose money (assuming its a market maker, which about 80% of options are). is this highly volatile scenario, its almost certain the market maker will lose more than you, as selling options is a short volatility play, and they will get creamed on it.
i know that was confusing, but unfortunately the shortest answer i had to your question....
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