why would an option writer take the risk of writing a ton of puts collecting a small premium if they couldn't short some common to minimize the risk that they might get the stock put to them forcing them to buy it from the put owner at the strike price
If the stock is put to them because they have the obligation to pay the strike price to the option buyer then they have the shares to cover their short.
the professional shorts don't want to claim any responsibility for the kind of piling on that led to the bear raids on LEH FNM FRE & AIG.
i don't think anyone disagrees with the notion that short selling does provide a service.
but professional shorts don't want to acknowledge how their role in capital destruction has played out when the ratings agencies threw these companies into a death rattle
look at the bear raids on BK STT GS MS in midday today before the news from the UK on halting shorting in financials
is the strategy of loading up on out of the money puts forcing writers to short the common that different from loading credit default swaps as the link above describes?
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