Round Trip Through the Spread

Market Making

P&L

Easy

You buy

200

shares at the bid of

19.90

and immediately resell them at the ask of

20.10

. Ignoring costs, what is your P&L?

Hint 1

Profit per share is the sell price minus the buy price.

Hint 2

Multiply the per-share profit by the size.

Show worked solution

1. Per-share edge
You earn the full spread on each share.
$20.10 - 19.90 = 0.20$
2. Scale by size
Multiply by 200 shares.
$200 \times 0.20 = 40$
3. Key idea
A completed round trip captures the full spread; one side alone only captures the half-spread relative to mid.

Answer: 40

1. Per-share edge