Re: Is there a purpose for this spread from the MM’s. .099 - .10 Thanks
posted on
Apr 02, 2009 08:33AM
Tight spreads are goood news... means there is interest and market for the stock.......... you dont want high spreads....(low volume...mm unsure which way the demand for the stock will go... thus they need the higher spreads in order to cover the trading).
I am not one that complains about MMs... how they are trying to "hold a stock down..." blah blah..... mm making codes...etc... baloney.....
MMs compete against each other... when there is demand for stock... multipe MMs get on the bid and try to fill the orders.... Once there are a few MMs on the bid... some try to get position by moving up the bid.... thus you can get Tight Spreads........ tight spreads can force the ASK to uptick....since an MM is moving up the BID ..... Other MMs know the asking price can increase...
MMs will make money almost regardless if the stock moves up or down..... so it really doesnt matter to them one way or another..... Vegas/The House doesnt care who wins a football/baseball game........... their only interest is in the action put in the game... thats it.