Overview
The Options Market Making Exercises cover the mental arithmetic behind quoting options. Fast pricing uses the desk rule of thumb for an at-the-money straddle, 0.8 × S × σ × √T, and splits any premium into intrinsic and time value. Put-call parity, with rates and dividends set to zero so it stays mental, prices the missing call or put and exposes a rich or cheap combo that a conversion or reversal locks in. Greeks & hedging asks for the delta of in, at and out-of-the-money options, the sign of each Greek for long and short positions, and the net delta of a book of contracts in shares. The scenario run takes one book from pricing the straddle through quoting, getting lifted, hedging, re-hedging after a move, reading the Greeks, theta and settlement.
What's Covered
1
Fast pricing
Straddle ≈ 0.8 × S × σ × √T, the ATM call or put is half of it. Intrinsic value is what exercise pays now; time value is the rest of the premium.
2
Put-call parity
C − P = S − K with zero rates and no dividends. When the market combo differs from S − K, the conversion or reversal collects the difference.
3
Greeks & hedging
Deltas run 0 to 1 for calls and 0 to −1 for puts. Long options are long gamma and vega, short theta. Net delta in shares = Σ sign × contracts × delta × 100.
4
Scenario run
One book of calls run against the clock. You price the straddle, quote, get lifted, hedge, re-hedge after a move, sign the Greeks, count theta and settle, with the working shown at the end.
Scoring
10
Exercise score
Ten questions per run, one point each. Type the number and, where asked, pick the side. Every answer is followed by the worked solution.
%
Scenario score
Every part of every step counts once. Blanks count as wrong, and the clock ends the run where it stands.
Best
Progress per exercise
Your best run, run count and last ten scores are kept per exercise. Nothing is ranked against other players.
There is no leaderboard for the exercises: the target is a clean ten out of ten on each exercise and a full-marks scenario run, not a rank. Numbers are randomised on every run, so re-running never repeats a question.
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