Is there another name for this strategy? A colleague told me that hedge fund manager Steven A. Cohen likes to squash volatility with this strategy.
Cohen would create massive blocks of expensive puts and calls around a strike price, to eliminate vega and prevent gamma. Cohen would collect the premiums, while long investors would have to churn through his walls before gamma could be ramped. By the time you got gamma squeezed, theta decay will have eroded any profit from your options holdings.
Can anyone elaborate please? Cohen's selling to open here right? But how does Cohen turn his short puts and calls into walls? Why would theta wear away your profits...what if you bought a LEAP call?