What’s the reasoning behind selling deep ITM calls?
For example there’s a stock I’m long on. Holding shares etc. It’s roughly around $6 right now but I’m looking to buy a leap for Jan 2026, at the $1 strike. Which brings me to my question, why would someone even sell that call? If anyone bought in below that, why would they sell an option that the buyer will exercise more than likely? If you bought in above, you’d be selling for a loss, would the premium be enough to offset that?
Just something I was thinking about. Even if you were bearish and wanted to sell, why not write a call closer to strike but still deep ITM like $3-4?
Posted by Liteboyy
1 Comment
are you not familiar with the concept of market makers? they keep the market liquid. that’s what the spread is they buy and sell and collect the spread. also a lot of institutions use options for hedging and neutralizing certain forms of risk.