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518 points bwfan123 | 10 comments | | HN request time: 0.458s | source | bottom
1. bwfan123 ◴[] No.44480917[source]
I am shocked by the size of the retail index options traders. They are selling put options naked without any underlying hedges and getting fleeced as a result.

Two strategies are detailed with trades: 1) expiry day price discrepancies between index options and underlying 2) expiry day painting the close

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2. ◴[] No.44481041[source]
3. steveBK123 ◴[] No.44483656[source]
My understanding is that it is the closest to legal gambling available in India and so the local market for gambling type behavior inflates the Indian options volume.
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4. maest ◴[] No.44483672[source]
NIT: It's _marking_ the close. "Painting" has a different meaning.
5. ◴[] No.44483920[source]
6. sokoloff ◴[] No.44484156[source]
Selling naked puts doesn’t seem particularly outrageous. About half the time that I want to buy a position, I’ll sell a series of put options just OoM until I get assigned the shares I want, collecting small premium along the way.

My “hedge” in this case is that I want to own the shares. (I’m short vs where I want to be.)

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7. Fade_Dance ◴[] No.44484555[source]
Futures index option traders are not looking to get assigned a basket of hundreds of stocks. They are cash settled, for one, so all that gets assigned is a profit or loss.
8. mhh__ ◴[] No.44486667[source]
This is why the flow is so valuable. The volume is pretty big, the spreads are enormous and the traders are terrible.
9. throwaway2037 ◴[] No.44486674[source]
Why is this down-voted? Thank you to point out the elephant in the room.
10. kamaal ◴[] No.44489764[source]
Actually, There are more people on Sports betting sites(Dream11, Jungly Rummy etc) than people who have hold Demat accounts.