A friend recommended a video about market making:


"A 20-Year Veteran Reveals the World of Options Market Making"
A 20-year options market making veteran speaks very candidly:
Market making isn't about guessing direction.
The core is:
- Estimating fair value
- Providing two-sided quotes
- Managing inventory
- Identifying informed flow
- Updating quotes quickly
- Not letting one bad trade eat up a day's profit
I think it's also very useful for understanding prediction markets.
A lot of the time we're not asking "who will win this match", but rather:
Is the current price at this order book cheap compared to the true probability?
And:
Am I earning the spread, or am I being picked off by faster traders with stale quotes?
Video link:
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