Sure
You said I'm more than a little curious how they expect functional futures and options markets when managing futures/options books *requires* the ability to short the underlying (more or less) on demand.
I am saying that "Requires" is a term coined by the options MMs. Who says the transaction "Requires" the ability to naked short to build a hedge? I, as a long buyer, am under the impression that I am buying actual shares of the company. What I am not being told is that I am actually buying a promise to deliver shares at some unspecified date in the future, maybe, if ever.
That "required" ability to sell me undated futures contracts and call them shares is pure fraud. It also has been bastardized to the point that companies like Novastar and OSTK suffer under a float that averages 3-5 times the issued shares authorized by the company.
Where does the options market maker get off laying off 100% of their risk onto the long shareholder's backs by fraudulently selling counterfeit shares of the company into the market and artificially moving the supply line to the right by 3X the authorized shares? The long shareholders are not parties to the transaction and receive zero compensation for carrying 100% of that risk.
Why does the "Function" of the options MM become the long shareholder's risk expense?
The options MM should have to borrow the shares to hedge with, just like everyone else. He should price the cost to borrow into the price of the puts. If there are no shares to borrow, then the MM should not be selling puts at all and should price them accordingly.
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