[Anadorr]

Correct - put options don't get squeezed, but short call options do.

The thing is, buying ITM put options usually due to delta hedging causes the counter-party (market maker) to sell shares short. If done directly (OTC) and with prior agreement, this 1) lets the parties create short positions owned by market maker, 2) hide these short positions, since market maker has 6 days to settle the trade (deliver the stock), but can fail to deliver and has in total 21 days for delivery.

The only short positions that need to be reported are "those short positions resulting from short sales that have settled or reached settlement date by the close of the reporting settlement date" [1], so as I understand market makers can hold a large non-delivered not settled 'limbo' position and not report it since it's not settled by the reporting date, and just reset the cycle every 6-21 days.

Oh, and short interest is self-reported and not enforced, so any self-clearing market making firm could make 'mistakes', sometimes even for 6 years straight [2], and go away with a small fine.

1 - https://www.finra.org/rules-guidance/rulebooks/finra-rules/4...

2- https://www.finra.org/media-center/news-releases/2015/finra-...