SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Politics : Ask Michael Burke
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Knighty Tin who wrote (32923)9/26/1998 8:58:00 AM
From: Ron McKinnon  Read Replies (1) of 132070
 
Mike, could you give me some insight into the profitability and risk dynamics of market makers?

I'm asking specifically because I have been messing around with NITE the last month or so
took a hefty position in it in the 6.50-8.50 range, unloaded at 9.50-11.50
am rebuilding a small position and may go heavy again
but im not sure I understand all the risk implications

NITE did their IPO in July
the latest info I have shows:
Insiders own 35%. Waterhouse Investor Services owns
12%, E*TRADE Securities owns 8%, Gruntal & Co. owns 5%

some big seller hammered this sucker down relentlessly from 16 to 6 a while ago; after he finished it made a solid double in about two weeks
volume of late has been "normal"

questions:

are the revenues for a market maker primarily from the spread and net gain/loss on held positions?

their data seems to show that the net risk of their long/short positions is reasonable hedged; am I missing something on that?

their PR indicates that they are one of, if not the leader in transactions; it would seem that the high volume days we are seeing would help their business

changes in such things as payment for order flow, soes or other SEC changes, other trading alternatives such as island etc; all may serve to negatively impact their results

they seem to be reasonably capitalized and with earnings of about a buck have a P/E of about 10x's

should I like this thing as much as I do and what risks might I be missing?

thanks
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News