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How Do CLPs Affect the Capital Efficiency of Options Market Making?

OMMs can concentrate capital near strike prices, providing deeper liquidity with less capital.
Greeks.Live28.10.25

How Do CLPs Affect the Capital Efficiency of Options Market Making?

CLPs significantly improve capital efficiency for options market makers (OMMs). OMMs can concentrate their liquidity around the expected strike price or a range of strike prices where they anticipate more trading activity.

This allows them to use less capital to provide the same depth of liquidity, reducing the overall capital requirement for maintaining a market-neutral options portfolio.

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