How Does a Minimum RFQ Size Affect the Bid-Ask Spread for an Option? ⎊ Path

How Does a Minimum RFQ Size Affect the Bid-Ask Spread for an Option?

A minimum RFQ size typically leads to a tighter bid-ask spread for the option. By requiring a larger trade size, the market maker can capture a larger total premium, which justifies offering a more competitive, tighter spread to win the trade.

It signals that the market maker is dealing with a serious order, allowing them to optimize their hedging strategy for efficiency.

How Does an Asset’s “Quality” Influence Its Bid-Offer Spread?

How Does the Minimum RFQ Size Relate to Regulatory Requirements for Block Trades?

What Is the Concept of a ‘Moat’ in the Context of Decentralized Finance?

In Options Trading, What Concept Is Analogous to the Competitive Bidding for Block Space in the Mempool?

What Is the Primary Risk Component That RFQ Size Helps Market Makers Manage?

What Is the Benefit of Multi-Dealer RFQ for the Trade Initiator?

Can a Wide Bid-Ask Spread Create an Arbitrage Opportunity?

How Does the Reduction in Transaction Cost Affect the Bid-Ask Spread for On-Chain Options?

Glossar

RFQ Size

Specification ⎊ ⎊ Request for Quote size, within cryptocurrency derivatives, denotes the nominal value or quantity of the underlying asset referenced in a specific option or forward contract being quoted.

Minimum Rfq Size

Specification ⎊ Minimum Rfq Size denotes the smallest trade quantity a counterparty will accept within a Request for Quote system, particularly prevalent in over-the-counter cryptocurrency derivatives markets.