macrocephalopod

they are buying stock, heavily levered, which means their money buys more exposure and market impact than it otherwise would have. 3) unspoken: options dealers aren’t haemorrhaging losses, so punters are net losing money, paying extraordinarily high rates on that leverage.

4) unspoken: there is no indication markets are any higher than they’d be if those punters had just bought less stock and kept it. If most options expire worthless and options dealers are profitable, then most of the premium used goes to ‘waste’ (into dealers’ pockets) which

means there is less delta exposure held by such investor-punters than there would be had they just bought stock. 5) Punters gonna punt. 6) Dealers gonna deal.

the question is really : 'is there a long term impact to flows?' and Bouchaud would argue yes.

one cannot forget that order flow is a Hawkes excitatory process. the delta hedging flows of options, no matter how they get structured, influence other momentum traders to follow, which distorts market information which does net net permanently impact price

this is something I've talked about (and folks like @NotQuiteMidlife) - with the advent of fractionalization and options non-recourse leverage, it's less sensible for a less sophisticated market participant to think in terms of fundamentals and more in terms of value-at-risk