Market Making Follow-Up Questions
Market making follow-up questions guide for defending fair value, spread, quote updates, inventory choices, and risk decisions.
Candidates practicing live explanation under challenge.
Why this fair value
Be ready to explain the probability, estimate, payoff table, or signal update behind your midpoint.
Why this spread
A spread follow-up usually tests uncertainty, adverse selection, competition, and inventory awareness.
Concrete example
If asked why 48 at 52 around fair 50, say the spread is 4 wide because the estimate is moderately noisy and you are currently flat.
What if you are hit
Explain how a buy or sell changes inventory and whether it changes your fair value estimate.
What if risk changes
Follow-ups may push position limits, losses, or adverse flow. Tie the answer back to quote size, skew, or spread.
Common mistakes
Candidates often defend the number instead of explaining the reasoning. Follow-ups are easier when the original quote had a clear rationale.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.