Virtu at ~$18 is an asymmetric situation: get paid to hedge from a market crash.

In this article, I’ll explain my Virtu Financial thesis in a few charts.

Virtu is one of the rare companies that raise when the VIX (volatility index) spikes and the market crashes.

How is this possible?

Virtu, as a market maker, supports market liquidity by providing a bid and ask price for securities (mainly US Equity).

> It makes money from the spread it is able to capture from people buying and selling.

Virtu makes more money when:

Virtu’s dream situations are crashes like in 2020, which presented an appealing combination of high volatility and wide spreads.

As a market maker, Virtu’s role is to always provide a bid and an asking price to facilitate transactions. This means that Virtu doesn't care about the direction of markets: Virtu cares about investors keep trading.

We could synthesize Virtu’s Trading Income by the following conditions:

Continues at: https://laorca.substack.com/p/virtu-get-paid-to-hedge