IB Quits options game!

Sig said:
MMs don't "facilitate" anything, they take one side of a trade. A broker facilitates a trade, a MM takes a side of a trade, pretty much by definition. There are no MM on the vast majority of the SSF contracts, and if you post a limit order it won't be hit by anyone unless you're way out of market to your disadvantage and someone happens along to see it.
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MM's facilitate the market by giving a two-side quote to trade on. SSF's are illiquid, hardly any trades and therefore uninteresting to MM's who make money on volume x spread.
So it's a bit of chicke/egg thing, where a tight market in SSF might eventually draw more volume and make it interesting.

What @i960 probably meant was that MM's do quote on SSF's in the brokered (off-screen) market, which normally gets more volume and interest and therefore is more interesting to quote on. By giving tight quotes on-screen, as a MM you lose a bit of negotiating power since there's already a market given... although Futures are usually pretty straight fwd to price/quote.
 
JackRab said:
MM's facilitate the market by giving a two-side quote to trade on. SSF's are illiquid, hardly any trades and therefore uninteresting to MM's who make money on volume x spread.
So it's a bit of chicke/egg thing, where a tight market in SSF might eventually draw more volume and make it interesting.

What @i960 probably meant was that MM's do quote on SSF's in the brokered (off-screen) market, which normally gets more volume and interest and therefore is more interesting to quote on. By giving tight quotes on-screen, as a MM you lose a bit of negotiating power since there's already a market given... although Futures are usually pretty straight fwd to price/quote.
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On SSF's I'd be happy for any quote, not necessarily a tight one yet! As you mentioned it is fairly straightforward, I've thought about putting together a little group to experiment with doing it myself. If indeed there are OTC MMs you could always lay off risk there, although I'm not convinced they exist outside of the top 10 most liquid SSFs.
 
Sig said:
On SSF's I'd be happy for any quote, not necessarily a tight one yet! As you mentioned it is fairly straightforward, I've thought about putting together a little group to experiment with doing it myself. If indeed there are OTC MMs you could always lay off risk there, although I'm not convinced they exist outside of the top 10 most liquid SSFs.
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Why do you want to tradesingle stock futures? Why wouldn't you trade synthetic forwards in the options market?
 
Sig said:
On SSF's I'd be happy for any quote, not necessarily a tight one yet! As you mentioned it is fairly straightforward, I've thought about putting together a little group to experiment with doing it myself. If indeed there are OTC MMs you could always lay off risk there, although I'm not convinced they exist outside of the top 10 most liquid SSFs.
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How many are you looking to trade? Because even if you yourself are going to provide a quote and have a few traded... you need at least 1k-2.5k lots to get someone interested to do a brokered trade...

But as @newwurldmn says... why bother with SSF's?
 
In the US, the market maker is the facilitator and they are getting the edge by taking your order flow and all low capitalized retail traders. They have unlimited capital effectively and each retail account has a margin account and thus trades too big and will get squeezed. They will be on both sides of your trades because all order flow goes to them first! Follow the money - why would the facilitator pay more commission per contract for option orders than you are paying the broker per contract? Where do they make that money? It's was no different trading in the pits when we spent all our time trying to find out where the market was positioned and at what point would they start to unwind for a loss and then we would exploit that. So if you try trading options in Asia vs the US, the difference is amazing - you can buy the low whereas in the US you will never buy the low...How else do you explain the superior execution in Asia?
 
hft co location and bots everwhere have made buying anything torture, except for the most liquid names. And even there, any news and the rug is pulled instantly.

Like trying to trade bitcoin when a big drug dealer has the feds at his door and he has to unload fast
 
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