Options Market Making Interview Questions
Options market making interview questions covering option payoff, fair value, volatility, spread, inventory, and hedge caveats.
Candidates who see options, greeks, or volatility in trading-game prep.
Start with the payoff
An options market-making prompt starts by understanding what the option pays in each state. Quote logic follows the payoff shape.
Estimate fair value
For toy prompts, fair value often comes from expected payoff across scenarios, with uncertainty reflected in spread width.
Concrete example
If a simplified option pays 20 with probability 25 percent and 0 otherwise, the expected payoff is 5 before costs or risk adjustments.
Volatility matters
Option-like payoffs can become more valuable when outcome uncertainty rises, especially when upside is convex.
Inventory and hedge caveats
After a fill, mention directional exposure, volatility exposure, and whether a hedge is possible in the toy setup.
Common mistakes
Candidates often jump to formulas without first explaining payoff, fair value, and quote risk.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.