FoundationMultiple choice
Quoting with inventory · Part 1 of 3
You make a market in a future you value at 50.00, normally quoting 49.80 @ 50.20. After a run of trades you hold a large long position.
You are long 10 lots and want to reduce risk. Which new quote is best?
- A49.70 @ 50.10
- B49.80 @ 50.40, widening only the offer
- C49.90 @ 50.30, moving the market up to buy more cheaply
- DPull both sides and wait for the future to rally
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Inventory: carrying risk, shedding it, and the reservation price
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