medium · Market Microstructure spread-econ
If a dealer has a realized spread of -0.05 on a round trip, what does this indicate about the dealer's performance?
- The dealer successfully captured the entire quoted bid-ask spread on this particular trade.
- The dealer lost money because they traded with informed participants.
- The dealer earned a net profit of about $0.05 per share on the trade.
- The dealer's inventory position stayed exactly balanced throughout the round trip.
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