3

Is the market maker for a particular stock also the market maker for that stock's options?

... or is it a different person entirely that makes the options markets for that stock?

If it's 2 different people, are they coordinating somehow or operating independently from one another?

[removed extra not-on-point details from the question]

4
  • Can you provide a specific example of "where I've observed what looks like changes in the option order book influencing the tape of the underlying"? And yes, there are Designated Primary Market-Makers (DPM) for stock options. Find the symbol directory at the CBOE and it will list a lot of them (it doesn't provide a DPM for every stock that offers options). – Bob Baerker Jan 1 at 1:36
  • @BobBaerker I'd have to record it using screen capture since the options side is just shifting around in the order book. – Greg Jan 1 at 6:12
  • @BobBaerker As for the DPM-related stuff, that was someone else's question which wasn't quite what I was asking, It was the closest thing I could find in here, but it doesn't address what I'm curious about. My question is probably more simply stated as, 'If John is the market maker for XYZ, is John also the market maker for XYZ options? ... or does a completely different person perform the role of market maker for XYZ options?' – Greg Jan 1 at 6:19
  • While someone else did ask about "the DPM-related stuff", you asked 'Are there designated market makers for stock options?'. Asked and answered. As for your question about being a MM in both the option and the stock, the big firms (Virtu, Citadel, etc.) make markets in options and stocks. I doubt that one person does both but I don't know. I'd suggest that you ask this question on the Option BB on EliteTrader. There are a few former market option makers who occasionally post there. – Bob Baerker Jan 1 at 13:43
0

Most anybody can buy or sell options, and a big or unusual order could certainly affect the underlying stock. But it's the new information about the order that does this, not the market maker. An efficient market digests new information and adjusts prices accordingly.

1
  • This doesn't answer the question. – Bob Baerker Dec 31 '20 at 22:14
0

The answer to that is "it depends". Let's start with "what is a market maker"? In some exchanges the market is made by a specialist responsible for a stock - and the exchange does not do options. On other exchanges it is a tag assigned to someone behaving in a certain way, and he or his company can do what they want - they may or may not do options or they may only do options, THEIR decisions (and yes, I know some people doing only options market making for stocks).

The answer generally can not be given because the environment is extremely diverse AND - the world and all the different exchanges makes it even more so.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.