Re:SoftBank unmasked as ‘Nasdaq whale’ that stoked tech rally
by ra7 on Friday September 04, 2020 @08:41PM
(#24380434)
Thanks for your insight!
So basically, the individual investor is screwed because they can’t figure out institutional orders, but market makers can that allows them to hedge?
Re:SoftBank unmasked as ‘Nasdaq whale’ that stoked tech rally
by ethbr0 on Friday September 04, 2020 @10:44PM
(#24381000)
I believe JC was saying that individual investors make bad choices, on the whole. Institutional less so.
Consequently, as a market maker who wants to limit their risk if a trade goes sideways, optimal hedging for each looks different.
(Part of this is probably related to the distribution of orders. I've heard large enough individual flow tends to mostly self-average.)
I’m a former options market maker. Seeing large volumes of retail flow is very different from seeing a giant institutional order. It affects what goes into the market versus gets internally crossed and what gets hedged and to what degree and how.
Individual investors have a moderately bad track record day trading. They have an abysmal one with options. I’m a decade out of the business, but we almost always defaulted to taking retail flow at risk.