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by stwrong 2120 days ago
I do not understand why market makers "have" to buy for OTM option volumes.

Sorry I am a stocks noob but losing blood these past two days. Any help is appreciated.

1 comments

I'm still learning too, but the short answer is that the seller of the options needs to manage their risk if the option is exercised. If you sell a call, you are promising to provide a stock on demand at a particular price. The most straightforward way to ensure that you are able to sell a stock in the future is to be holding the stock now. If you don't already have enough of the stock in your portfolio, you need to buy it.

A longer but excellent answer is here: https://youtu.be/9eDqmOPSs9Y?t=908