>>21262586Wow sweaty okay let's unpack some of that.
First, market makers do all kinds of things. HFT, arbitrage, volatility trading. They also eat the spread (sell the ask buy the bid) and sell options, but they have to do all kinds of schemes to outweigh the liability of having all that inventory moving against them which requires constant hedging. Some of them fuck up and it's challenging to do correctly.
Second, people act like theta gang is free money but if you do it uncovered that 1 time out of 10 will completely and utterly fuck you and can be hard to manage. That time a naked put or naked call moves hard and fast against you, it comes down to how leveraged you are, how skilled you are at managing it, any tail hedges, and how much relief you get with it moving back in your direction. Assuming you didn't get liquidated you could keep rolling for tiny credits but being stuck in drawdown for months or possibly years close to the edge of liquidation is a bit intimidating.
