Subject: Re: Check Capital Management BRK Options Stragegies
Not sure you meant that MM's were actually synthetically short (sell a call and buy a put) when they sold a call, but yeah, they needed to account for the bad effect on their short calls of share price going up, and as you explain they bought shares to offset (which helped share price to go up!). In principle, they could have done a synth long (buy call and sell put) instead of straight long, but they'd do whatever best for their overall order book. Maybe the call buyers were a different group of more sophisticated investors, and not the original 'diamond hand' redditors?

Jim's sentence is the key to understanding those on the opposite side of the trade from you.
> They are in the business of picking up the bid/ask gaps, not in the business of speculating on the direction of stocks.
They want to pocket the realized bid/ask, and otherwise remain neutral to market direction, hence the phrase "delta neutral". Usually it's a market maker on the opposite side of the trade from you, e.g. if you want to buy a call it's the MM who sells you the call and not e.g. me (assuming I was long a call). They sit in the middle and pick up a risk-free (as much as they can hedge risk) realized bid/ask gap. Nice business, if you can get it (well, they do have overhead)! Because basically every trade is delta-hedged, there's a *huge* amount of money tied to the valuation model they use, I've always wondered about the possible unintended effects of that.