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Most traders don’t realize they’re using a proprietary tool that doesn’t exist anywhere else. If you’ve ever looked at the market maker move (MMM) indicator on Thinkorswim or TastyTrade, you’re working with something unique — and understanding where it comes from changes how you should use it.
This indicator was first defined by Thinkorswim, which is why you won’t find it on most platforms. When the same team built TastyTrade, they brought it with them, but the core methodology that drives it remains behind the curtain.
What matters more is the logic it’s built on: a forward-looking assessment of risk rooted directly in options pricing, not historical movement.
To put that in context, ATR looks backward at how much price has moved in recent days, while something like VIX reflects broad market expectations of volatility. The MMM adds a third layer by revealing what liquidity providers expect based on the risk they’re willing to take.
It’s a subtle but powerful difference because it reflects how the institutions that manage order flow price uncertainty.
What Market Makers Actually See
The exact formula isn’t disclosed, but you can approximate the logic. If a market maker sells both an at-the-money put and call at certain prices, they’re signaling confidence that the stock will finish within the strike plus or minus the combined cost of those options.
That pricing behavior is tied to how they hedge and manage risk using factors like the underlying price, implied volatility, delta, and theta — all core components of their internal models.
The MMM is similar to VIX but approaches the problem from the opposite angle. Instead of aggregating sentiment or broad volatility expectations, it extracts information directly from how options are priced right now. That gives you a glimpse into institutional risk assumptions rather than crowd consensus.
The expected move also doesn’t grow in a straight line as expiration gets farther away. The curve flattens, reflecting the reality that markets aren’t expected to drift at the same pace throughout time. This helps explain why long-dated expirations often move less than traders assume.
And when you get close to expiration, a different dynamic comes into play: Prices often gravitate toward major strikes, a behavior commonly called pinning. Even if price swings violently intraday, the most likely outcome is still a settlement somewhere near the projected expected move.
That’s why wild swings late in the session often don’t change where things ultimately land.
There’s also a relationship between wider bid-ask spreads and elevated expected moves. When spreads widen, market makers are signaling higher uncertainty — building in more room to stay safe and maintain their margins.
That widening often coincides with high MMM values, revealing how risk shows up directly in the order book.
The One-Sigma Range Nobody Explains Correctly
The MMM represents a one-sigma range — roughly a 68% probability that the stock will finish inside that range by expiration. But this is where many traders get tripped up: The indicator is based on the closing level, not the path. A stock can break outside the range intraday, even dramatically, and still settle comfortably within it by expiration.
That behavior is far more common than many realize.
Because of this, the MMM isn’t about predicting perfectly contained price action. It’s about estimating where price is likely to land. That makes it useful not only for planning standard trades but also for setting up defensive ones.
If you want to structure a position that benefits from abnormal movement, placing it outside the expected move ensures you’re operating in territory the market isn’t pricing as typical.
How to Determine the MMM Yourself
For platforms that don’t offer the MMM, you can approximate it yourself by adding the prices of the at-the-money call and put for a specific expiration. That simple straddle calculation gets you surprisingly close, letting you replicate the insight even without the official tool.
Understanding this indicator won’t tell you direction, but it will tell you what professional risk managers believe is probable. And when you’re aligned with how market makers see risk, you’re no longer guessing at the forces shaping price — you’re reading them directly.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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