Market-making an S&P 500 Component

Discussion in 'Strategy Development' started by clearinghouse, Nov 24, 2011.

  1. Simple question:

    Could a market-maker possibly make money over the long run in stocks related to the S&P 500 without looking at what's going on in the SPY or ES? Or is the correlation sufficiently high "most of the time" to essentially demand that market makers /always/ must look at event activity in the ES (or SPY)?
  2. They don't really care about the test of the world. A good MM will know the markets and how his or her book trades relative to other news, events and to the broader markets - but for the most part the matching engines just do their thing.

    The guys on the floor are not really trading they are called MM's because they make markets not trade.