A Wall Street trading giant is riding the volatility wave

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  • Virtu Financial, the high-frequency trading firm, was on a tear during Tuesday’s trade as volatility stormed the markets.
  • The company’s stock was up as much as 3.8% Tuesday morning, according to Markets Insider data.

Virtu Financial, the high frequency trading firm, is riding the volatility wave sweeping Wall Street, and its stock is enjoying a nice bump.

At last check, Virtu was up 3.86% at 11:33 a.m. ET at $US20.20 – it’s highest position in a year.

Virtu was one of the only stocks that ended Monday’s bloodbath session in the green. That’s likely because volatility has stormed the markets. The Cboe Volatility Index (VIX) climbed over 50 for the first time since August 2015 Monday and is still standing strong at 41 points, at last check.

As liquidity providers, HFTs are scanning the markets for opportunities in which buyers and sellers aren’t matched up. But when volatility is too low, like it was for much of 2017 and early 2018, those opportunities are hard to come by because there are fewer price swings.

“Greater volatility means a greater demand for liquidity and higher liquidity premiums (spreads) and that is what market makers sell,” Larry Tabb, the founder of TABB Group, told Business Insider in an email. “When the demand and price of liquidity increases, market makers usually make money.”

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