FoundationNumeric answer
Your base market is bid, offered. Your rule shifts both prices down one cent for every lots you are long. You are long lots. What offer do you show?
Answer with a number. Fractions, powers and expressions like 23/6 or C(52,5) are read correctly in practice.
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
- Quoting with inventory, part 1 of 3Foundation
- You are long a large position and want to shed it. What is the right quote adjustment?Applied
- 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