Screen Trading & Wholesale Trading
Financial markets are characterized by numerous participants with different views at different moments over time. When participants have a desire to trade, our market making activities make sure there is always an opportunity to do so. We buy when others want to sell and we sell when others want to buy. As such our trading activities add substantial liquidity to the markets on which we are present.
Over the last 25 years Optiver has gained a superior understanding of what it takes to be a good trader. We believe trading is a decision making process where success is the result of thorough preparation. Our preparation methods vary. They include leaning on pricing models and understanding the limitations of those models, and extend into cross instrument understanding and beyond. It all allows us to take and profitably manage risks as a market maker.
Whether it’s trading or doing business in general, decision making can be considered along two lines. On one, there is the time taken for a decision. While a other companies will eventually spend days, weeks or months making a decision on their next line of products, we will only spend seconds or when prepared, a fraction of a second, making our decisions. The second line is the type of answer we reach. While some problems like 2+2 only have one answer, in trading, decision making moments stream out into a web of dynamic and interrelated answers. As a market maker we have to be able to quickly solve a web of possible solutions and stay on top of the chain.
At a critical size, our market making activity grants us a unique view of the market structure and dynamics that allow for additional market taking activities to be profitable.
Our screen trading activities are closely linked with our wholesale trading activities. Wholesale trading comprises all direct trading between Optiver and the professional ‘wholesale' market. The professional market is mainly represented by brokers that execute trading flow for counterparties such as banks and institutional investors. These trades are normally carried out through verbal communications such as via phone lines or direct box lines instead of through the screen.
The wholesale trading team consists of specialised and experienced market professionals who trade exchange traded products off the screen. In general these trades are more complex combinations of products or very large in size and thus the wholesale market exists alongside the screen to facilitate these transactions. Our wholesale trading department makes markets in listed equity, index and fixed income derivatives. Besides options, we also provide liquidity in delta one products, namely futures, ADR Crossbooks and ETFs.
Another function of our wholesale trading department is to find and screen market information to facilitate trading decisions for the company as a whole, actively looking for trading opportunities in the market and keeping track of possible risks. Thus, wholesale traders are considered the ‘eyes and ears’ of the company.