Hey there everybody, I have a question.
My question is that everybody knows that OTM contracts are going to become worthless on expiry, yet I see lakhs of people buying those contracts on expiry day and that too after 2 PM.
I don’t understand who are these people? Is there something I am missing?
In the absence of time, theta as a major force is absent. This gives gamma more power especially when his friend Vega comes over.
Gamma scalping with limited loss- better Risk-reward and almost 0 POP is what drives these bunch of expiry traders.
People who are closing their short open positions??
Yes, absolutely- as with any hedged trade.