pseudo market making

Discussion in 'Prop Firms' started by virtualmoney, Mar 9, 2008.

  1. Can anyone explain what is and how to carry out pseudo market making?
  2. ?.....Okay, I get "it" now..........You can earn virtual money with psuedo market making.
  3. cvds16


    It's putting up a bid and a offer in an option serie, it's not allowed ...
  4. Is this technique applicable to index futures?
  5. Anyone who does this profitably won't tell you anything. ANYTHING.
  6. buy the bid, sell the offer, repeat.

    Easier said than done.
  7. cvds16


    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 ...
  8. 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.
  9. Buy at bid, sell at ask, wait for reversion to mean?
    Maybe for options, but most indices futures are a tick spread apart.
  10. cvds16


    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
    #10     Mar 11, 2008