IBKR is widening spreads and making money

Discussion in 'Options' started by sho-tim, Oct 14, 2008.

  1. sho-tim


    "One consequence of the crisis has been more revenues for options brokers, says Andrew Wilkinson, senior market analyst at Interactive Brokers. “We’re certainly benefiting from bloated volumes,” he says.

    The turbulence in the markets has also created something of a game of chicken in the industry, where those who are prepared to remain actively trading can stand to benefit substantially.

    “Anybody who can stand in front of this train will make money,” says Mr Wilkinson. “At times like these, when some market-makers get hammered, they tend to step aside. We stand back a bit but we widen our spread on the options market-making side. If you do that when other people have walked away, we tend to get hit on either side of our bid and our ask, which means we get more volume and do it on more attractive terms.”
  2. Andrew is correct.

    But I find it unreasonable for market makers to be able to have markets so wide. They were too wide before this volatility began and they are ridiculous now. But, it's the only game in town.

    The problem with self regulatory exchanges is that they are run for the benefit of the exchanges, not for the benefit of customers.

    In all my years as a CBOE MM, we never widened the markets.

  3. >>IBKR is widening spreads and making money >>

    That's what money makers do. Anyone surprised?