Quoto

Learn / Library / Market making

Short position gain

Market makingEasy

A market maker sells short units at . The market then moves and the mid price becomes . What is the profit on the position?

Checking an answer needs JavaScript. The hint and the solution open without it.

A whole number, a decimal, a fraction like 3/8 or a percent.

Hint

A short position gains when the price falls.

Solution
  1. Each unit was sold at and could now be bought back at .
  2. The gain per unit is .
  3. The profit on units is .

Answer:

Next questionBack to the library