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So back to the original question... If a retail trader has direct market access, does a MM really have any significant advantage over the retail trader ? Ok, a retail trader has to pay broker comms, but a MM has overheads such as office rent, staff costs etc, etc. Where exactly is the...

Well, I can do both, and at the same time ! Am I a MM but without their overheads ?

Certainly can in the UK. So what happens in the US for example if you place a buy limit order ? Does it sit on the bid or the offer ?

I did say if a retail trader has direct market access, i.e. he can also buy the bid and sell the offer. What other advantage (if any) does a MM have ? Retail traders pay comms, MM pay overheads.

If a retail trader has direct market access, does a MM really have any significant advantage over the retail trader ? Ok, a retail trader has to pay broker comms, but a MM has overheads such as office rent, staff costs etc, etc. Where exactly is the MM's edge ?

Agreed, by hedging delta with the underlying, in which case the final P & L is path dependant. Isn't it still zero some, as in the net wealth of all the DN trading (gamma scalping) participants won't change - it merely gets re-distributed ?

Agreed. The confusion appears to be in the understanding of the phrase zero sum. Whatever...

gkishot If you interviewed every single person that traded in any option series when they expire, let's say GOOG Mar06 370 Puts, and asked them what profit / loss they made, then added the results, it would net to zero (ex comms). That is what is meant by Zero Sum - net wealth doesn't...

gkishot Stocks are different. Though there is an argument for zero sum, it's much more complicated. Options / futures are a contract between 2 parties (facilitated by MM's), and what one gains the other must lose. But.... Optioncoach No, it doesn't matter.

True, but how does that alter the zero sum fact ?

Options trading has to be zero sum, no doubt whatsoever.

Johnny Need to get your head in some option theory books. Personally I'd hold off trading them until you've a reasonable understanding of how they're priced. Good luck.

It's a question of leverage - as you go OTM leverage increases, ITM leverage decreases. Same with time - as you get closer to expiry leverage increaqses, further out in time leverage decreases. So it really depends how big a bang for your buck you want...

Option Trader Have you looked at suing them ? I don't know about the US, but here in the UK I'm sure you'd have a legal angle. Might be worth a consultation....

Technical analysis – Pah (!) you may as well go read tea leaves, or trade according to astrology. The markets are random, but I can’t prove it. Well done in cutting your APPL Puts, that takes courage. I think he will !

Oh really ?

Arnie I think patience is always a good trait, but especially so in this game. Let the market come to you. BTW, Pro’s have the same crystal ball that you’ve got ! Selling OTM options normally provides a good income stream - until the market turns and bites you. Up the escalator...

Did you not know that margin requirements are constantly changing ? A large enough adverse move against you could trigger a crass auto liquidation, which costs an awful lot more than it could have had it been done by a human –be it yourself or your broker. Don’t be so smug as to think it...

Trust myself ? WTF are you smoking ? Can’t you read ? Let me do baby talk – it means I can go take a crap in confidence knowing that my account won’t be desecrated by the time I’ve finished. If you’re an IB client and net short, you can’t, period. No. Let me spell it out for the...

I want to be given an opportunity to resolve my margin requirement myself. A heads-up telephone call is all it takes. If that fails then having an experienced dealer liquidate in an orderly and cost effective manner is what I want. And guess what…. I’m happy to pay for it ! A decent broker...