A market making strategy is a trading technique that pairs buyers and sellers of an asset. It works similarly to sports bookmaking, where bookmakers pair punters in opposite directions. The primary goal of a market maker is to minimize their risk by operating a book that is “delta neutral.” Delta is a mathematical term that refers to the rate at which the price of an asset increases or decreases over a period of time. Unlike non-derivative assets, which are securities, market makers don’t have any interest in determining their own price, but instead prefer to run books that are “delta neutral.”
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