Quant Memo
Market Making/●●●●●

To cut inventory, skew, don't widen

You're long 5,0005{,}000 shares of a stock worth 30.0030.00 and want to reduce the position. Flat, you'd quote 29.9729.97 / 30.0330.03 (a 66-cent spread). A colleague suggests widening to 29.9429.94 / 30.0630.06 to "be more careful." You argue for skewing to 29.9429.94 / 30.0030.00 instead.

Which recenters your book toward flat, and why doesn't widening do the job?

Your answer

This one is open-ended. Work it through, then check your reasoning against the full solution.

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