Selling calls benefits from OTM calls being overvalued. I’m talking about going long OTM calls. Am I missing something?
Right, I’m saying there is a conflict between these two facts that I don’t know how to resolve.
Ah, you’re saying that because a lot of funds sell OTM calls no matter the price, you’d expect the returns to be positive.
I think the explanation is just that there’s an even larger group of people who buy OTM calls due to lottery-ticket biases, and this effect wins.
Hmm, maybe. Do you know who does this? Is this retail investors?
Selling calls benefits from OTM calls being overvalued. I’m talking about going long OTM calls. Am I missing something?
Right, I’m saying there is a conflict between these two facts that I don’t know how to resolve.
Ah, you’re saying that because a lot of funds sell OTM calls no matter the price, you’d expect the returns to be positive.
I think the explanation is just that there’s an even larger group of people who buy OTM calls due to lottery-ticket biases, and this effect wins.
Hmm, maybe. Do you know who does this? Is this retail investors?