starting as an options local on euronext

[cvds16]

Quote from Trajan:

I think, generally, it is for large groups/firms now. Edge is virtually nonexistent. So what edge there is has to be put on for larger size, hence, higher capital requirements. Second, most locals aren't very sophisticated quatitatively or technologicaly. With tight edge, there isn't much room for error. Whereas before, if there was .10 or .15 cents worth edge, your pricing didn't matter as much. That has changed and you need to be able to make markets when everything is close to being efficient. Also, technology is expensive and takes brain power. These things can be overcome with resources that only larger groups and firms can afford. That's my .02 cents anyways.

thanks for your input, I was thinking along the same lines, that's why I started this thread in the hope of getting some feedback (not exactly what I wanted to hear but probably the most realistic scenario).

 

[just21]

How much does it cost to get market maker priveleges, (no cancel fees and margin benefits) so you can do what you did before in the DIA?

 

[cvds16]

Quote from just21:

How much does it cost to get market maker priveleges, (no cancel fees and margin benefits) so you can do what you did before in the DIA?

It's not just a matter of getting market maker privileges, but also of the spreads that are being used, and I'm afraid the analysis of Trajan is right on: a lot of options are priced to perfection nowadays. This would explain the fact that few locals have remained in these electronic markets.
The edge in DIA options was quite big (relatively speaking), nothing compared to anything I see on Euronext. Nevertheless I wanted to think this through as an alternative.

 

[just21]

I see plenty of wide option strikes every day. The advantage of electronic trading is you can narrow them, something a market maker in the pit cannot do.