Now think of keeping that all together when a market moves limit, there is no underlying, you now are the underlying, vol was 30 last night, but now maybe 50 or 100, you are the largest maker and everyone is asking you to make the first market and provide a stradle run for the next 18 months to send out on the phones globally, a dozen brokers are tugging on your sleeves, everyone else is just shoving each other and screaming, clerks are stacked 6 deep trying to hand orders into a pit, and no one has computers or can update your values or position for you. It was a good way to learn options. And rhose were the best fucking days of my life... And then some pudwacker smegma face putz on ET tells me I need to realize what he means by Delta risk. Priceless!
Thank you for taking the time to answer. I think I understand, no, appreciate how complex/difficult it is to be a MM. I would not be as upset from now on if they take my bid/ask spreads.
I never delta hedged as a market maker.. The markets were much wider,and 80 percent of my profitability was reversals, conversions and boxes..I would also trade butterlys and condors.. It was very EASY to make money back then
Thank you for the reply. If you are making market today, would you still do the same and if so do you think you will still be profitable? And if you traded butterflies and condors, who bought yours since you were the maker?
Funny, I remember the boss guy at the first place I worked saying "statistically it is wrong to hedge, with that said, I hedge everything" OK. I gotta ask. WTF did you do when someone walked in and said 'hey, I want to sell a 70 delta put and buy a 70 delta call against it?' ... ignore the options and just go buy the underlying, knowing what was coming?
I would delta hedge my positions a bit more..Im not sure what edge Market Makers have in highly liquid tight markets. To get in to a position,I legged everything..That was my edge,I.e.leaning on customer bids and offers..
https://www.nbc.com/saturday-night-live/video/first-citywide-change-bank/n9701 Why I loved to say... 'Guys, it's tight girls and wide markets. Not the other way around.'
If there was enough edge,and it looked like I could trade into a conversion I would participate and bang out the 30 delta call and/or grab the 30 delta put while buying futures..I didnt need sheets to trade...
I know this is basic...But you need to understand how the market works in a crash/bubble. Below is from Wiki concerning the dot.com bubble. You also need to look at 2008 and what you do when there is NO MARKET at all...How to close your positions. It does and will happen. The Nasdaq Composite stock market index, which included many Internet-based companies, peaked in value on March 10, 2000, before crashing. The burst of the bubble, known as the dot-com crash, lasted from March 11, 2000, to October 9, 2002.[3][4] During the crash, many online shopping companies, such as Pets.com, Webvan, and Boo.com, as well as communication companies, such as Worldcom, NorthPoint Communications and Global Crossing, failed and shut down.[5][6] Others, such as Cisco, whose stock declined by 86%,[6] and Qualcomm, lost a big portion of their market capitalization but survived, and some companies, such as eBay and Amazon.com, lost value but recovered quickly.
@tradingpoker, I want to reiterate more about what I said with the coaching service. I’m not saying all of these coaching/trading courses are bad, and some of them actually offer a lot of value. It really depends on your expectations and what U are trying to get accomplished. If u want to get a coach/take a trading course to accelerate your Learning curve, get another perspective on trading, improving your knowledge, or generate new trading ideas, these services could be a good place to start. Through the years, I have tired numerous of these online trading courses, trading workshop, and online alert services. I have yet to come across one where the person running the course is actually making good money trading with any proof. (All I heard were claims) A lot of the stuff you learn through these classes u can learn from reading a few books or by watching YouTube videos. Also, after taking these course, I applied what I learn in the market, and never made any real money. None of these systems were able to beat the market. With all of that said, if u are hoping a service that charges a few hundred or thousands will be able to give u a strategy where u can make a good living trading, I think u are searching for a needle in a haystack.