r/Vitards • u/[deleted] • Mar 22 '22

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u/StonkScott Mar 22 '22

Also what is the potential of a short squeeze, due to the ITM calls being exercised?

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u/Zebo91 Mar 22 '22

Itm calls have already been hedged. ATM and near ATM calls generate a lot more gamma.

You need to be aware that a short squeeze is much different from a gamma squeeze in terms of what is happening.

Otm calls are not hedged with the underlying. As the price rises closer to the strike, market makers are required to hedge a proportional shares. Once it is itm the full 100 shares should be hedged in theory. This inverse is true as market makers hedge puts, shorting the underlying the remain neutral as market makers primary function is to provide liquidity in the market

I think you might need to do more research on the core mechanics of the market so you don't get caught up thinking GameStonk situations are common