Skip to main content
Learn

What Is the Role of a Market Maker in Setting the Bid-Offer Spread for a Financial Derivative?

Market makers quote both sides, capturing the spread as compensation for providing liquidity and managing risk.
Greeks.Live11.11.25

What Is the Role of a Market Maker in Setting the Bid-Offer Spread for a Financial Derivative?

A market maker provides liquidity by simultaneously quoting both a bid (buy) and an offer (sell) price for a derivative. The spread between these two prices is their potential profit margin for taking on the risk of holding the asset temporarily.

They aim to keep the spread wide enough to cover their costs and risk, but narrow enough to attract trades.

What Is the Role of a Market Maker in Narrowing the Bid-Ask Spread?
What Role Do Market Makers Play in Setting the Bid-Offer Spread?
How Is the Risk Taken by a Market Maker Compensated through the Spread?
Does the Bid-Offer Spread Change Depending on Market Volatility?

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.