Covering Part of a Short

Market Making

Inventory

Easy

You are short

150

shares. A customer sells you

70

shares. What is your new position?

Hint 1

A customer sell means the dealer buys.

Hint 2

Buying adds to a signed position.

Show worked solution

1. Signed arithmetic
Start at $- 150$ and add the $70$ shares you buy.
$- 150 + 70 = - 80$
2. Key idea
Use signed inventory: long is positive, short is negative.

Answer: -80

1. Signed arithmetic