Options market making through Interactive Brokers

No American exchanges: that is probited to make a two-sided market, also you can't quote automatically; quotes have to be manually made.
 
>> ajacobson: What exchange(s) ?

American exchanges for starters, mainly coze I can understand what you're saying and read what you're writing. Asia may be much more profitable but can you read Kanji?
 
@Aquarians, I don't want to come across like I'm putting you down...

But, I think you shouldn't bother with market making. Unless you've built a model predicting volatility. And even then, I don't think market making would be the way you should trade. Market making is mainly about trading volume, getting good fills on quotes and constantly hedging... so in effect, you trade volatility, but MM's try to hedge everything so in a perfect world they only make profit on bid/ask trading.

I'm inclined to say your style would suit better for hedgefunds, medium/long term trading. Which might be the reason your MM firm ignored you, since they care about speed and increasing volume... less about volatility modelling... that's more when you want to predict vols. At least... that's my 2cts.

What models/system have you built?
 
>> JackRab: Unless you've built a model predicting volatility.

Well, precisely that :) I understand options as volatility arbitrage. Market buys at 30%, I sell them at 30% but actually buy it at 20%. And conversely, market sells at 20%, I'm buying if I can sell it at 30%.
 
Aquarians said:
>> JackRab: Unless you've built a model predicting volatility.

Well, precisely that :) I understand options as volatility arbitrage. Market buys at 30%, I sell them at 30% but actually buy it at 20%. And conversely, market sells at 20%, I'm buying if I can sell it at 30%.
More...

So why do you want to do market making? Because with your model... you wouldn't be making markets, just hitting bids until either the market corrects to 20% vol or your risk manager tells you to buy it back since your risk is exploding.

You would better suited in a HF, not that that's easy to get into...
 
Yup, HF would probably bring better opportunities than my current 200 ms throttling from Interactive Brokers. But I'm reckoning that some market making might also benefit me and it's easier to attempt initially over IB than either HF or exchange-member.
 
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