Delta Market Making Interview Intuition
Delta market making interview intuition for directional exposure, quote impact, and simple hedge language in option-like games.
Candidates discussing option inventory and hedging at a high level.
Delta is directional sensitivity
At a high level, delta describes how much the option value tends to move when the underlying moves.
Inventory creates exposure
If you sell an option, you may inherit directional exposure through that option position. The sign depends on the option and position.
Concrete example
If an option position gains when the underlying rises, being long that option has positive directional exposure in the toy sense.
Quotes can reflect delta risk
If a trade would increase unwanted directional exposure, you may quote less aggressively or discuss hedging.
Hedge caveat
A delta hedge can reduce directional risk, but it may introduce costs, residual risk, and the need to rebalance.
Common mistakes
Candidates often say hedge it without naming the exposure being hedged. Start with the direction and size of the risk.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.