easy · Market Microstructure adverse-selection

Which quote adjustment may help reduce that inventory, all else equal?

1. Raise only the bid aggressively to acquire still more shares
2. Guarantee the inventory disappears without a trade
3. Raise both bid and ask to attract more customer sales to the dealer, even though that would tend to increase the existing long inventory
4. Shade both quotes lower to encourage customer buys and discourage customer sells

Sign up free to see the explanation and track your rank →