Bit more complex than that, but in very very general terms.....
Thing is, they usually get taken out in the end. Pretty rare for a large one to be defended successfully, but it's not as simple as that - would have to go into the gamma and vega characteristics of a complex options portfolio to talk about what the various participants are doing and why - all gets a bit long winded.
Most useful thing to concentrate on in terms of OTC fx options and their effect on the underlying (i.e. spot ) market is the gamma profile of the market makers. If at certain levels they're predominantly long gamma, expect spot to be 'sticky'. If the reverse, expect it to be 'whippy'. This changes depending on all sorts of things, not least where we are in spot.
It's definitely more an art than a science. And before anyone asks - there isn't a single website, isn't a single 'formula', isn't a 5 minute scalping strategy for guaranteed money off this stuff (Not you Arabian obviously, just anticipating the PMs etc). It's just background knowledge.
GJ
