Search results

I don't actually have 1M now, and if I did, I would do what you said and just collect coupons for the rest of my life and retire. But if I had 2M, then I'd use the other 1M to do something I really want to do.

Thanks. This response has probably helped me understand market making more than all the stuff I've read in the past, haha. Ok, so let's say you offer a bid/ask on a call option and someone accepts your ask price and buys a bunch of options from you. Now that you sold a bunch of call...

So assume you found $1M and want to start making markets for one particular stock's option chain. How do you start? For example. I think a particular stock will go down in price. So what should I do? Start buying all the Puts I can? But then I would be speculating and not market...

Thanks for the response. I am definitely interested in market making but don't have the funds to do so yet. I am just trying to figure out what I need besides money before I can do so.

You don't mind explaining? Let's say I'm a sucker and a buy at $0.70. What happens?

Assuming you have enough money, is it possible to make markets and maybe become an exchange specialist for the CBOE if you don't have the fastest technology? I know fast computers really help out in taking advantage of arbitrage opportunities but can't you still make markets without top notch...

Hmm... I don't get it, the numbers don't make sense. If it's the premium, how come the 120 call has a higher premium than 115 call?

I've never seen this before on other option chains, but what is the price column on Google Finance for options mean? http://www.google.com/finance/option_chain?q=NYSE:LNKD It's not the strike price, price of underlying asset, or even bid/ask. So what is it?

Ah that makes sense. All these options books keep on explaining things from a futures options standpoint. I'm also reading Baird's book on Option Market Making and its the same thing. Thanks by the way.

I'm reading Natenberg's Option Volatility & Pricing and have a quick question about becoming delta neutral. Don't know how many of you guys read the book, but in it he says the underlying asset will always have a delta of 100 (long position) or -100 (short position). So to become delta...

Thanks for the very detailed response. That exactly answers all my questions. Is there a way to rep people on these forums? So option market makers can just create an option to sell to you? Wouldn't that mess up the supply and demand of options because technically aren't options supposed to...

Wow! Thanks for the detailed response. This is exactly what I wanted to know. Interesting how a market maker can just 'sit out' if they wanted to. Is there a way to rep people on these boards?

I'm trying to learn about the industry and have a few questions about market makers. I'm particularly interested in exchange specialists that provide liquidity. I'd assume the rules are different for each exchange so if possible relate it to the CBOE but if you can't, that's fine. -For...

Thanks guys. I get it now. I'd always lose 0.01 not including commission fees.

Ok, I'm completely new at options theory and trading (just picked up Natenberg's book and am reading it), so please bear with me. I was thinking about this strategy, and in my head it sounds like 'free' money. But obviously it's not free money because everyone would be doing it. So where's...