AppliedMultiple choice
You are long a large position and want to shed it. What is the right quote adjustment?
- ALower both the bid and the offer by the same amount
- BLower the offer and leave the bid alone
- CRaise the bid to attract flow
- DWiden both sides to reduce the chance of trading
The worked solution is in Premium
The answer, the full working and the one idea to take away – for this and all 1,322 questions in the bank. Answer it in practice and your working is marked, with a known mistake named when you make one.
Learn the method
Inventory: carrying risk, shedding it, and the reservation price
Reported in interviews at
More market making questions
- Your base market is 49.98 bid, 50.02 offered.Foundation
- Quoting with inventory, part 1 of 3Foundation
- You are long 500 shares of a stock whose daily price changes have a standard…Applied
- You are carrying a large long position with no view on direction.Advanced
- Avellaneda and Stoikov give a reservation price r = s−qγσ²(T−t).Expert
- You are asked to make a market on the sum of two fair six-sided dice.Foundation