I am trying to understand some MM (Market Maker) data that I have.
As a follow up to a question I read about MM:
How does a dealer (or market maker) earn the bid-ask spread on a stock?
And to this piece of information from Investopedia:
Market makers must maintain continuous two-sided quotes (bid and ask) within a predefined spread.
I am wondering the following:
Is a MM obliged to quote a bid and an ask price at the same time?
E.g. take a look at the following raw piece of MM data:
MMExchange, MMID, MMBid.Price, MMBid.Size, MMAsk.Price, MMAsk.Size
Q, NSDQ, 2.25 6, 2.29, 19
Interpreting this data, I get the following:
MM Exchange : Q
MID : NSDQ
MM Bid Price: 2.25
MM Bid Size : 6
MM Ask Price: 2.29
MM Ask Size : 19
Note:
- Price is in dollars: so the displayed spread is
2.29 - 2.25 = $ 0.04
- Size means the number of shares that the MM is quoting for the given bid and ask (I believe it's quoted in thousands)
- I got the data from a reliable source (so I'm sure it's correct)
- I'm referring to Registered Market Makers here (so not private investors)
Now I have the following questions:
- Did the MM quote these bid and ask prices at the same time?
- Why is the MM (price) spread larger than the current bid and ask spread? (I also have that data: the price quote that exchanges send out)
- Does this mean that I can calculate the profit the MM is trying to make on this quote?