Market Making Mark-to-Market Interview
Market making mark-to-market interview guide for understanding how inventory value changes when fair value updates.
Candidates whose games track PnL while holding positions.
Mark-to-market values current inventory
Mark-to-market means valuing held inventory at the current fair value or market reference rather than only at the trade price.
Fair value updates affect inventory
If you are long and fair value rises, your inventory mark improves. If you are long and fair value falls, it worsens.
Concrete example
If you buy 5 units at 20 and fair value moves to 23, the inventory mark has improved by 3 per unit before any closing trade.
Short inventory reverses the sign
For a short position, fair value rising hurts and fair value falling helps. State the position sign before calculating.
Do not confuse cash and mark
The trade cash flow and current inventory value are related but not identical. PnL reasoning needs both.
Common mistakes
Candidates often track trade prices but forget to revalue remaining inventory after a fair-value update.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.