> I've wondered about this. Specifically, how can you make a market in a product that has high violatility and fairly low trading frequency?

A large spread.

Hmm. So are market makers only ever effecting instantaneous matches?

I was under the impression they often held some portion of the asset between buy-sell or sell-buy in order to increase liquidity.

(Which would explain why they like HFT, as anything that boosts trade frequency would decrease their exposure)

They do hold underlying and have to hedge their risk in various ways. A large spread helps a lot.