Mental Math for Market Making Quotes
Mental math for market-making quotes, including midpoint, spread, probability price, skew, quote size, and update arithmetic.
Candidates preparing for quote-based trading interviews.
Quote math starts with midpoint
The midpoint is the center of the bid and ask. It often starts near fair value, then moves with information, inventory, or risk constraints.
Spread is arithmetic plus judgment
You can compute spread width quickly, but the choice of spread depends on uncertainty, adverse selection, competition, and objective.
Concrete example
A 48 at 52 market has midpoint 50 and spread 4. If fair value moves to 54, a natural update might shift the market upward before considering inventory.
Skew with position
If you are long, quote in a way that makes selling easier or buying less attractive when the game state calls for reducing inventory.
Common mistakes
Candidates often compute midpoint correctly but ignore why the spread or skew changed. Quote arithmetic must support quote reasoning.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.