I did not really think about it, but instinctively I would say that market closed -> less volatility -> less adverse selection (there is probably a lot of takers algo that rely on live market data that can't run when the market is closed) -> tighter spreads
I did not really think about it, but instinctively I would say that market closed -> less volatility -> less adverse selection (there is probably a lot of takers algo that rely on live market data that can't run when the market is closed) -> tighter spreads
The algo part is actually smart. The LLM came to a similar conclusion but wasn’t specific enough. What about the unhedged position and the inventory risk though? Where does that go in this picture?
The algo part is actually smart. The LLM came to a similar conclusion but wasn’t specific enough. What about the unhedged position and the inventory risk though? Where does that go in this picture?
maybe becuz there’s less markets they need to MM?
futures r 24/7
spot isn’t
So when market open they r spread more thin ?
maybe becuz there’s less markets they need to MM?
futures r 24/7
spot isn’t
So when market open they r spread more thin ?
Woah wow. That is a really smart way of thinking. But,
spot closed → can’t hedge → inventory risk up → spread wider
Vs
spot closed → nothing to manage there → capacity freed → spread tighter.
Which one wins?
Woah wow. That is a really smart way of thinking. But,
spot closed → can’t hedge → inventory risk up → spread wider
Vs
spot closed → nothing to manage there → capacity freed → spread tighter.
Which one wins?
they hedge on HL..? or on the underlying assets future prices?
they hedge on HL..? or on the underlying assets future prices?
Like in order to keep their delta closest to zero, whenever someone longs/the market makers sells, they buy equivalent real stock in the real world to hedge.
I could be wrong
Like in order to keep their delta closest to zero, whenever someone longs/the market makers sells, they buy equivalent real stock in the real world to hedge.
I could be wrong