An institution that makes the market and earns from the Bid-Ask spread. It does not bet on direction and stays delta neutral through the session.
What this role is
A Market Maker (Market Maker) is a professional trader who commits to showing continuous bid and ask prices in contracts or stocks: sells to whoever wants to buy, buys from whoever wants to sell, and earns the difference. In return, they provide the liquidity that makes trading possible at all.
The economics of the craft
They don't bet on direction. They collect the spread thousands of times and neutralize their exposure at once: they sold a call, so they bought shares equal to its delta, and they must keep adjusting the hedge as price moves (this is where gamma comes in). Their profit comes from volume and spread, and their risk from violent moves that arrive before they can hedge.
Why their behavior matters to you
Because their collective hedging is the mechanical engine that every gamma dashboard measures. When market makers are long gamma they absorb market moves, and when they are short gamma they amplify them. Reading their inferred positions shows the nature of the day before it moves.
Hypothetical example
A wave of large weekly call buying on a stock: market makers sold them and hedged by buying the stock. So a rise pulls them into buying more (extra fuel) and any drop pulls them into selling. The stock's "strange" behavior that week is the shadow of their books.
Common mistake
Picturing them as an adversary chasing your personal stop: a market maker is a statistically neutral machine that doesn't know your name. The "stop hunting" you see is usually collective hedging mechanics at liquidity levels, not an individual conspiracy.
Why their behavior matters, not who they are
Their collective hedging is the mechanical engine that gamma dashboards measure. When market makers are long gamma they absorb moves, and when they are short gamma they amplify them. The "stop hunting" people often see is usually hedging mechanics at liquidity levels, not an individual conspiracy.
Where to see it on the platform
The gamma dashboard infers the market makers' net positions from open interest and shows when they are absorbing and when they are amplifying.
The gamma dashboard infers their net positions from open interest and shows when they are absorbing and when they are amplifying.
