Question:

How do market makers bid up share price?

by  |  earlier

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What funds do they use to do this, or can they do this without using funds? How does this work?

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3 ANSWERS


  1. Market Makers have the same ability to bid up a stock as anyone does.  They have to buy stock to get the price to rise.


  2. MM have access to their firms own money to advantage of opportuities.

    and

    MM can inflate the prices of options "foretelling" a rally Therefore signaling a perception that somebody know something and the share prices are bid up

    There are probably 10 other ways I do not know about.

  3. Usually these folks have a lot of funding at their disposal - corporate money, or the backing of other investors.

    Another trick these folks use is buying on margin and short selling.  They're either borrowing money or borrowing stock.  Both are extremely risky.

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