3)Why buy ETFS at all if you can buy the underlying equity? you can smaller amounts of ETF's, the ETF's could be better priced, they are more liquid with tighter spread to give you just three reasons
2)How can any individual investor know if they are really holding the underlying shares? If I buy an ETF what is stopping the market maker from simply buying the options and using the rest of the money for God knows what? This is just rambling, rest assured they don't buy options ...
1)how is the market maker having slippage when they are making the market for the options of the ETFs themselves? market makers in ETF's and options on ETF's are not the same person ... again rambling ... and like I said they don't buy the options, and if they did they would have slippage ... more rambling ...
What does you being an option market maker have to do with anything? How can you explain then the CBOE market maker list that shows clearly that some ETF option market makers are also the issuer of the ETF itself? I will even provide you the link http://www.cboe.com/TradTool/Symbols/symbolall.aspx
So finally you understand my original question! now you are the one that seems to be naive, if it is at the same firm (which I have been alluding to in my first post), then there is absolutely an moral hazard