Top 15 Market Maker Skills (2024)

15 market maker skills for your resume and career

1. Equity Options

Equity options give buyers the right to buy or sell shares at a fixed price. Market makers use equity options to provide liquidity, execute volatility strategies, and manage portfolios. They price and trade equity options, maintain orderly markets, and create bid and ask prices.

Here's how market makers use equity options:

Provided liquidity and executed volatility strategies as an Equity Options Market Maker on the CBOE * Developed and managed personal portfolio
Managed independent proprietary portfolio consisting of equity options and underlying stocks.

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2. Portfolio Risk

Portfolio risk is the possibility of financial loss resulting from a portfolio's exposure to various risks. Market makers use portfolio risk to design risk management sheets that bucket and normalize portfolio risk. They also hold daily meetings with individual traders to discuss portfolio risk and trading strategies. They analyze and manage options portfolio risk of foreign exchange options, including hedging via futures and options. They provide portfolio risk assessment with a focus on limiting and countering risk.

Here's how market makers use portfolio risk:

Designed risk management sheets that bucketed and normalized portfolio risk.
Provided consistent portfolio risk management.

3. NASD

NASD stands for the National Association of Securities Dealers. Market makers use NASD for various purposes, such as maintaining markets in over-the-counter stocks and supporting monthly reporting processes. They also use NASD as a disciplinary hearing board member.

Here's how market makers use nasd:

Appointed as a NASD Disciplinary Panel Hearing Board Member (2006)
Registered broker and NASD market maker for major wholesaler Maintained markets in 20 over the counter stocks.

4. Financial Markets

Financial markets are physical or online arenas where buyers and sellers exchange financial assets, such as stocks and bonds. Market makers use financial markets to assess the macroeconomic environment and determine the impact on volatile stocks. They also analyze financial markets to enter equity trades based on economic analysis and risk management techniques. Additionally, they utilize knowledge of financial markets and asset management to monitor global markets and decipher correlations to various traded instruments.

Here's how market makers use financial markets:

5. Manage Risk

Managing risk is the process of identifying and mitigating potential losses. Market makers use risk management techniques to minimize losses and maximize gains. They analyze economic data, execute trades, and research public companies to manage risk. They also use hedging strategies and real-time risk analysis tools to minimize risk.

Here's how market makers use manage risk:

Created and programmed real time risk analysis and pricing tools to manage risk and track arbitrage opportunities.
Monitored and assisted other traders to manage risk within the guidelines of the company.

6. Equities

Equities are stocks or shares in a company. Market makers use equities by analyzing market conditions and making decisions to buy or sell them using fundamental and technical analysis. They also provide liquidity to maintain a fair and orderly market while managing risk for over 65 equities.

Here's how market makers use equities:

Analyzed market conditions and made decisions to buy/sell equities using fundamental and technical analysis.
Traded several equities and options names, managing all risk, capital and executing trades using electronic screen based software/technology.

7. NYSE

The New York Stock Exchange (NYSE) is a stock exchange that allows companies to list their securities and enables traders to buy and sell them. Market makers use the NYSE to buy and sell securities on a discretionary basis, maintaining orderly markets in specific stocks. They also provide market updates to institutional and independent floor brokers, execute and print trades, and manage trading crowds in breakout situations. In addition, they may present on the functionality of the NYSE to corporate executives, world leaders, and students.

Here's how market makers use nyse:

Provided professional insight to FINRA in developing appropriate continuing education modules for licensed NYSE floor personnel.
Traded $5 million dollars of firm capital daily on a discretionary basis in small and large cap NYSE stocks.

8. Arbitrage

Arbitrage is the practice of profiting from a price difference between two or more markets. Market makers use arbitrage by identifying and capitalizing on opportunities in derivatives, commodities, and related products. They perform volatility curve analysis, option theory, and pricing to develop a disciplined approach to trading. They also leverage opportunities with program trading, derivatives, convertible securities, and insider transactions. By doing so, market makers maximize revenue and uncover skew and volatility arbitrage opportunities.

Here's how market makers use arbitrage:

Developed a disciplined approach of trading to identify arbitrage opportunities through volatility curve analysis and option theory and pricing.
Capitalized on market inefficiencies and performed volatility arbitrage among correlated NASDAQ products traded across multiple floor and electronic exchanges.

9. Market Making

Market making is the act of buying and selling securities at prevailing market prices. Market makers use market making to identify and analyze business strategies, present a valuable presence, train others, generate profits, and communicate with exchanges and regulatory bodies. They also use market making to develop profit centers, improve the accuracy of trading, and oversee the build out and development of electronic market making systems.

Here's how market makers use market making:

Identified and analyzed business strategies to enhance profitability of ETF market making business.
Presented an active market making presence valuable for continuous liquidity.

10. ETF

An ETF, or exchange-traded fund, is an investment fund that trades on a stock exchange. Market makers use ETFs to create a market for equity securities. They establish electronic markets for all equity, index, and ETF products, and execute trades for high net worth clients in hourly-priced sector funds, the precursor to modern-day ETFs. Market makers also prepare pricing models and analyze the risk of the ETF business on a daily basis. They manage the risk of the ETF desk, which can exceed over $50 million of commission per year.

Here's how market makers use etf:

Established electronic markets in all Equity, Index, and ETF products.
Expanded ETF trading desk from 1 fund to 50 in 6 months (2003).

11. Technical Analysis

Technical analysis is a method for evaluating securities through statistical patterns and trends. Market makers use technical analysis by incorporating charting to identify trends, studying historical volatility, and leveraging fundamental analysis to identify trading opportunities. They also use it to develop a strong foundation in screening techniques.

Here's how market makers use technical analysis:

Incorporated the use of technical analysis/charting to identify trends within the variety of futures products traded at the NYBOT.
Assisted in providing research, sales, and trading with technical analysis of all issues under coverage.

12. Cboe

CBOE stands for Chicago Board Options Exchange. It's a marketplace where stock options are traded. Market makers use CBOE to buy and sell options contracts, often quoting both a bid and an ask price for the same security. They also create a two-sided market for the exchange-traded funds (ETFs) that are options on the S&P 500 index.

Here's how market makers use cboe:

Transferred from profitable Treasury trading group after 2 years to return to CBOE to develop new profit center in SPY.
Checked all the Bi-Annual Position Limits for 2014 by comparing CBOE's numbers with the Investment banks numbers.

13. Hedge Funds

Hedge funds are investment vehicles that allow individuals or entities to invest in various financial assets. Market makers use hedge funds by committing capital to institutional accounts and retail customers, managing risk on a profitable basis. They also establish relationships with hedge funds, solicit new trading relationships and order flow, and execute block and basket trades for institutional clients.

Here's how market makers use hedge funds:

Committed banks capital to institutional accounts, hedge funds, and retail customers, then managed risk on a profitable basis.
Established relationship with a major hedge fund, resulting in substantially increased trading volume.

14. Derivative

A derivative is a contract between two parties that specifies the conditions under which one party agrees to pay the other a certain amount of money. Market makers use derivatives to manage risk and price positions in the corporate derivatives market. They also structure interest rate derivative products and solutions, and trade derivatives on the Pacific Stock Exchange. As one market maker put it, "Priced derivatives and allayed asset risk for Gargoyle Strategic Investments."

Here's how market makers use derivative:

Priced and risk managed multiple positions in corporate derivatives, including accelerated share buyback programs and long-dated convertible bond/call spread overlays.
Dissected and managed complex derivative position risks, managed risks and interpreted complex financial documents.

15. Fundamental Analysis

Fundamental analysis is a method of evaluating a security by analyzing financial and business factors. Market makers use fundamental analysis to develop profitable trading strategies, evaluate the market impact of new drugs, and determine pricing for single stocks, sectors, and the general market. They use technical analysis to recognize market trends and formulate options trading strategies on a daily basis.

Here's how market makers use fundamental analysis:

Perform technical and fundamental analysis of futures and volatility trends to formulate and execute options trading strategies on a daily basis.
Performed technical and fundamental analysis and recognized market trends to develop profitable trading strategies.

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