more incorrect information. market makers CAN short to hedge -- thus the listed market still functions.
the fact that the govt has told retail investors they cannot short but still are allowing i banks to hedge listed options shows what a joke this ban is.
lol you use terms like "most likely" and then pair that up with the word DOES in capitals. Son, thats called an oxymoron. More like, it CAN affect the market directly because the person on the other side MIGHT hedge himself and short the stock. Again, not a DIRECT line to the open market and certainly not a certain possibility. Again I gave a simple answer to a simple question. You my friend need to take the stick out of your arse lol...maybe before you shoot your load you need to learn how to read.
"basically" it DOES have a very direct effect on the market because if you buy puts stock very likely is getting shorted. just move on and let others deal with the heavy lifting. you clearly do not understand how the options market works.
You took what I typed way out of context, I mentioned that "BASICALLY" it has no DIRECT affect on the market. I didn't want to get into Hedging and derivatives and such for a simple question. Sorry you took offense to a simple answer.
if you buy a put, someone else is short the put. if that other person is another retail investor, then nothing happens. if it's a market maker or institutional entity (most of the time it is), then that person is going to go out and short stock to hedge its exposure to a short put. the higher the delta, the more stock it shorts. if the delta is 1, then it shorts the whole position.
thinking that buying puts has no effect on a stock's price is a very incorrect and ignorant way of understanding how the markets work.
This doesn't apply to Puts. Basically Puts do not affect the price of the stock in the open market, unlike shorting which is selling the stock in the open market even though you don't own the stock.