Skip to main content
Learn

What Is the Relationship between a Flat Book and the Bid-Ask Spread Offered?

A flat book minimizes inventory risk, allowing the market maker to charge a smaller risk premium and offer a tighter bid-ask spread.
Greeks.Live14.11.25

What Is the Relationship between a Flat Book and the Bid-Ask Spread Offered?

A flat book allows a market maker to offer a tighter bid-ask spread. Since a flat book minimizes directional inventory risk, the market maker can afford to charge a smaller risk premium (margin) on the options they quote.

A non-flat book, indicating higher risk, would necessitate a wider spread.

How Does a Market Maker Manage Inventory Risk in a Low-Volume Crypto Asset?
Why Is the Bid-Ask Spread on a Futures Contract Often Tighter than on the Spot Market?
What Is ‘Adverse Selection’ and How Does It Relate to the Bid-Offer Spread, Separate from Inventory Risk?
How Does ‘Information Asymmetry’ Create the Adverse Selection Component of the Bid-Offer Spread?

About

Contact

Editorial Policy

Terms of Service

Privacy Policy

Cookie Policy

© 2025 Greeks.Live

All Rights Reserved

Greeks.Live RFQ

Build by Noo on Engine

Source: The content on this website is produced by Greeks.live's proprietary analysis systems, which utilize advanced Large Language Models (LLMs). This information might not be subject to a full human review before publication and may contain errors.
Responsibility: You should not make any financial decisions based solely on the content presented here. We strongly urge you to conduct your own rigorous due diligence and to consult a qualified, independent financial advisor.
Purpose: All information is intended for informational purposes only. It should not be construed as financial, investment, trading, or any other form of professional advice. News and data are not trading signals.
Risk: The cryptocurrency, derivatives, and options markets are highly volatile and carry significant risk. By using this site, you acknowledge these risks and agree that Greeks.live and its affiliates are not responsible for any financial losses you may incur.