Options Glossary

Glossary: Market Maker

Last Updated: February 21, 2015


Market Maker

What Does Market Maker Mean in Options Trading?

A market maker is often times is also called a liquidity provider.  This is a trading company, or an independent trader, that quotes both a buy and a selling price in a stock held in inventory.  The intent is to profit from the difference between the bid and ask, or bid-offer spread.
This increases availability of assets in the market, which is why the term liquidity provider is also used.
A Designated Primary Market Maker (DPM) is a specialized market maker approved by the exchange to guarantee that he or she will take the position in a particular assigned security, option or option index.
Adapted from:  Wikipedia.org

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