Funny thing about the options market; it simply transfers risk from the common stock market, it doesn't cure it. You don't create fewer problems when you add calls and puts to a volatile situation. You create more problems.
That's what's happening right now in Taser (TASR:Nasdaq - commentary - research). The free-lunch folks, the ones who figured, "OK, I don't want to be bought in so I will short the stock in puts," are getting their heads handed to them. So are the market makers, who can't find stock, either, when they sell you the puts. In the meantime, retail buyers keep coming in and buying five lots of puts, causing an even more noxious situation.
The volume in the puts and calls in Taser is stunning, dwarfing the float for the darned stock. When you add in that the owner-managers aren't selling very much and the largest shareholder, Sprott, isn't selling its 1.2 million shares because it believes that Taser should be at four or five times where it currently sells, you have the most combustible short squeeze I have ever seen.
So, Taser bears, delude yourself in thinking that you're safe because you won't be bought in when you own the puts. You won't.
You just might lose everything anyway. The only thing different is that you can't lose more than you put up, which, I have to admit, is worth something, given the monstrous losses this stock has caused short-sellers, who have lost far more than they put up at the start.