What happens if a market maker has a bad day?

• A. They must stop trading for the day
• B. They are still obligated to buy all shares of their specialty stock, regardless of market conditions
• C. They automatically contract a loss limit
• D. They can sell only to certain counterparties

Answer: (B)

Market makers stay in the game by providing liquidity—they keep quoting two-sided prices and stand ready to buy or sell a stock even when the day isn’t going well. Their job isn’t to quit trading or to let the market grind to a halt; they’re expected to maintain a fair, orderly market by continuously supplying prices and taking the other side of trades as needed.

On a bad day they manage risk differently, not by absorbing unlimited shares. They may adjust the size of their quotes, widen spreads to reflect higher risk, hedge exposures, or limit new inventory to avoid excessive risk. They are not obligated to buy every share offered regardless of conditions; there are practical limits tied to capital, risk controls, and exchange rules.

So the idea is that market makers’ duty is to stay active and provide liquidity, not to automatically purchase an unlimited amount of stock in any situation.