What are the factors that contribute to the bid-ask spread in the digital currency options market?

1 answers

• Nov 28, 2021 · 3 years ago
  In the digital currency options market, the bid-ask spread is influenced by various factors. One important factor is the level of competition among market makers. Market makers play a crucial role in providing liquidity to the market and narrowing the spread. When there is intense competition among market makers, the bid-ask spread tends to be narrower. Another factor is the overall market conditions. If there is high demand for options contracts, the spread may be narrower as there are more buyers and sellers in the market. Conversely, if the market is less active, the spread may be wider. Additionally, the size of the trade can impact the spread. Larger trades may require more liquidity and can result in a wider spread. Traders should consider these factors when trading digital currency options to optimize their trading costs and execution.
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