What Is the Role of a ‘Broker-Dealer’ in Facilitating Options Block Trades?

A broker-dealer acts as an intermediary, finding a counterparty for a large options block trade and negotiating the terms privately. They provide the necessary connectivity to institutional clients and market makers.

Crucially, they manage the entire process, including regulatory reporting and settlement, ensuring the trade is executed efficiently at the negotiated price, which is vital for minimizing the slippage and market impact of the massive transaction.