Preparation for 45 min trading round at companies like Optiver

Interview process/preparation
#1

Hi, I have a super day planned with Optiver in a few days and I have a few questions around preparation on the Market Making games and the 45 min trading games.

  1. I want to know how should I prepare for the market making questions? (Any resources ?) (What are interviewers looking for ? any examples of failures ? )

  2. We will have a 45min market making game with other interviewing candidates. Apparently I will be using a software to trade a product for which they will give a theoretical value of. Does anyone have any experience on how this round works like ?

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#2

First of all, congratulations you made it to the super day. Optiver has a very peculiar hiring process. I believe you must very comfortable doing mental calculus , but I am putting a book here as a reference for anyone else:

Also check out videos from the author on YouTube.

That being said, let’s go back to @saagaa’s questions:

  1. I am afraid I don’t know any market making interview preparation books as it more something you practice than anything else. My advice will be, if you know the theoretical/fair/true value of something, your bid and ask should be around it and you will make systematically money, be outside it and orders will arb (arbitrage) you rapidly. Take the orders you receive as indications about that. Let me walk you through an example:
  • Let’s say true PV is 100 but you mistake it for 90. You give a 85-95 bid ask (mind you, they will impose the bid ask spread (or difference) on you). All the orders you will receive will be on the buying side. In that case, you should move you mid to 95 in order to stop the bleeding. Same logic applies if you mistake the theoretical value for 110. Be very aware of the orders you receive and their sense and you should be just fine. Ideally, your bid-ask spread should reflects the uncertainty (std dev/error) of your theoretical value, but they always put a small cap for the bid-ask spread, pushing you to be very precise.
  1. I have never heard of that software nor exercise. But I guess the same advice given before applies. Even if they gave you a theoretical value, be aware of its errors and trade accordingly. They will probably compute you PnL (stands for Profits aNd Losses) at the end and if you follow theses advices, you will be making money at the end. It will be worth it to train your mental calculus again as it can be useful here in order to make quick decisions.

Good luck with the interviews. Do not hesitate us to post more questions and let us know how it goes.

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