Bid Ask Spread Mental Math
Bid ask spread mental math for midpoint, spread width, percentage spread, skew, and quote examples in market-making interviews.
Candidates drilling bid/ask arithmetic for trading games.
Compute midpoint and spread
For bid B and ask A, midpoint is (B + A) / 2 and spread is A - B. These should be automatic in market-making drills before harder quote updates.
Convert spread to context
A 2-wide spread around 20 is much wider in percentage terms than a 2-wide spread around 200. Context matters when comparing markets.
Concrete example
A quote of 99 at 101 has midpoint 100 and spread 2. A quote of 95 at 105 has the same midpoint but much more uncertainty or risk cushion.
Skew changes symmetry
A quote can keep the same spread while moving the midpoint or become asymmetric around fair value to reflect inventory pressure.
Common mistakes
Candidates sometimes treat wide and tight as purely arithmetic. The spread width should be tied to uncertainty, selection risk, and position.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.