I used to do a kind of version of this, but bidding on different strikes than offering and using an option model to delta-hedging. Those days are gone with cancellation costs and penny spreads, it was a real edge, it was really profitable ...
Heh, well, I do pseudo market making, and I know of quite a few other entities doing so (some are well known, some are not). I suppose I can talk abt some generalities. To put it basically, it is exactly "market making" without being designated by the exchanges as a market maker (or specialist), therefore does not have the % of volume requirements. Of cos, reverse is also true, a pseudo market maker does not enjoy the preferred execution that a MM have. Making it harder to just outright capture the bid/ask spread.
Buy at bid, sell at ask, wait for reversion to mean? Maybe for options, but most indices futures are a tick spread apart.
It's more complicated than that, if you just wait for reversion to the mean you will get killed. You delta hedge. pseudo market making only applies to options