| Topic List | Page List: 1 |
|---|---|
| Topic | Stock Topic 32 |
| Lopen 08/12/21 4:36:00 PM #25: | Forceful_Dragon posted... But I guess what i don't understand is that if the price goes to $40 and if the 2 week calls get exercised, couldn't plum just exercise the 2 month call and turn the whole thing into a wash? The point is Plum paid a considerably higher amount for the 2 month call than he received for selling the 2 week call It is ultimately about reducing risk if the stock price moves up. If the market maker can force purchased 2 month calls to be taken out of play for the price of a 2 week call, they will do so. It takes away Plum's ability to make gains when the stock price goes up after the 2 week window expires-- it also takes away his ability to sell more calls. I mean ultimately the math is that he paid X and received Y, and Y is a few hundred dollars lower than X, and market maker knows this as this information is available to them if you're and is just going to take the difference between Y and X because it's free money to do so. Risk free money is always better. --- No problem! This is a cute and pop genocide of love! ... Copied to Clipboard! |
| Topic List | Page List: 1 |