Market Making Binary Event Interview Questions
Market making binary event interview questions for quoting yes/no outcomes from probability, spread, signals, and inventory.
Candidates practicing binary event trading games.
Binary markets map probability to price
For a yes/no payoff, fair value is often the probability of yes times the payoff scale. A 0-to-100 contract with 65 percent yes probability has fair value near 65.
Quote around the probability
Once you have the fair value, choose bid and ask around it. The spread should reflect uncertainty, selection risk, and how much flow you want.
Concrete example
If your fair yes probability is 55 percent, a simple toy quote might be 53 bid and 57 ask before inventory or new information changes the market.
Update after signals
A clue that raises yes probability should raise fair value. A clue that only increases uncertainty may widen the spread without moving the midpoint much.
Track inventory side
If you sell yes contracts, you are effectively short yes exposure. Your next quote should account for that position.
Common mistakes
Candidates often quote binary markets without saying the payoff scale. Probability-to-price only works after the contract payoff is clear.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.