How do Options Market Makers make money?

Answer by  maulikfinancialengineer (6)

Option market makers make money in the bid-offer spread (bid < offer). They take opposite positions for buyers and sellers of the markets, buying at the market bid price (sellers sell at bid) and selling at the offer (buyers buy at offer). They profit on the spread.

Answer by  nib86 (17)

Market makers, by definition, make money by providing a supply of any given commodity. For options, a market maker writes (sells) options. However, unlike a commodity, writing an option leaves you with an open position. This position must be closed by entering into an offsetting financial transaction.

Answer by  BobbyLee (29)

They make money by speculating on the bid-offer spread of options held in their inventory. Bid is the price at which an individual is willing to buy an option.