Ok, (a) that is not what spoofing is (b) can you explain how a HFT possibly sees your order before it gets to the exchange? Do you think they are mind-readers?
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Rather, using trends in increasing order flow from retail to price future options properly, helping determine IV in order to still make money and not blow up during a gamma squeeze.
Think you might be overestimating how much P&L at an options MM is derived from smid cap names (the ones that are most subject to squeezes). It is tiny compared to the P&L from SPY/SPX options and large caps.
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I think rather in this case it's to avoid loss than to make more profit. And I'm sure the models work the same on SPX/SPY and large caps. It helps keep IV as a check against gamma squeezes.
Thanks. Twitter will use this to make your timeline better. UndoUndo
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They do not need to make money on every name every day, in fact they will probably try to hedge some delta/vega across names which will lead to deliberate losses (but they are fine because it’s risk reducing and cheaper than trying to get delta/vega flat in every name)
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Oh for sure, but at scale I'm sure it's being utilized across names.
End of conversation
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