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The original was posted on /r/Superstonk by /u/AssPinata on 2025-01-22 03:42:43+00:00.


God this made my brain hurt. Somebody could be writing these and profit like crazy if GME ran. Correct me if im wrong on any of this….i almost had an aneurysm trying to think it through.

BUT check this out. If I’m understanding correctly…

Market maker that buys this put has to hedge accordingly, but how do they hedge theta? They have to WRITE THE APPROPRIATE AMOUNT OF CALLS at similar strike to remain delta neutral. Did anyone notice there’s 17,302 $125 calls open on the other side for that expiration? Ideally the market maker would also buy 100 shares to prepare for delivery of these deep ITM puts. To make up for buying ONE of those puts, market maker has to write 25-30 calls.

  1. lunatic writes deep ITM puts
  2. market maker buys the put. Market maker’s job is to make the market and provide liquidity.
  3. market maker writes equivalent amount of calls to hedge (25-30 calls) OR goes for a vertical or calendar spread, whatever nets them positive theta. Ideally the market maker themselves would write puts close to the strike as well to offset the risk, but we can see that’s not the case based on OI. Why write puts when IV is so bloated still? Easy profit. We can see the 1/16/26 call has 17,302 open interest.

Well, what happens if the stock rises significantly? Oh boy. Put writer gets money, sure. The market maker, however is knee deep in written calls and needs to start buying them back. BUT WHAT IF THEY CAN’T BUY THEM BACK FAST ENOUGH? Who’s writing calls for them to buy back when apes are ham fisted yoloing calls driving vega risk up the wazoo? Have to buy shares now, but at those quantities? Might as well buy calls. That’ll drive the price even higher. If this put writing guy gets out of hand, I can’t even imagine what kind of chaos this would cause if the price were to surge. It hurts my brain trying to understand how market makers actually hedge someone writing deep ITM puts.

This is either a legitimate short or someone is paying big sacrificial money to lay a trap for market makers. That’s my take. It may be wrong because I got crazy confused thinking about it.