Replies to post #59622 on Zeev's Turnips Patch-No Politics (ZEEV)

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IMHO, it works in two ways:
(1) Market makers, being the under writer of most options desire for open interests expire worthless. Overwhelming majority of options do expire worthless. Those guys make money primarily from range-bound market movements.
(2) Big traders, whether big hedge funds or PPT market rescue operation, enter market in a big way but hedge their positions with counter-balancing option purchases. Those guys try to make money from trending moves. By purchasing massive puts at the same time as massive equity/future purchases, they limit their downside risk. At the market top it works in reverse, ie. massive call purchase at the same time as layering out shorts. These two types of option purchases not only limit their downside risk but also entice the Market Makers synchronize with the trending operation. The market can really move when those two large pools of money are synchronized and working in the same direction.