Market Maker

Question

Market Maker

Accepted Answer

A market maker is a firm or individual that actively participates in financial markets, offering both buy (bid) and sell (ask) quotes for securities. They create liquidity and market depth, ensuring enough buyers and sellers to facilitate trading. Market makers may also earn profits from the spread between bid and ask prices, and may engage in trading for their own accounts, also referred to as principal trades

Market Makers are especially important in options. Imagine having to pair off with someone willing to sell what you want to buy, on your own, for each and every transaction. That'd be nightmarish and difficult! Market Makers facilitate that for traders and investors.