> ## Documentation Index
> Fetch the complete documentation index at: https://mathematicalcompany.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# MM Arb

> Quote on one exchange and hedge on another for delta-neutral spread capture.

<Note>
  **Pro Feature.** Requires a Pro or Ultra subscription. [Get started at api.mathematicalcompany.com](https://api.mathematicalcompany.com)
</Note>

# Market-Making Arbitrage

Quote on one exchange (earn the bid-ask spread), hedge on another exchange (neutralize directional risk). Combines Avellaneda-Stoikov market making with cross-venue delta hedging.

## How It Works

1. Generate quotes on the **quoting exchange** using Avellaneda-Stoikov (reservation price + optimal spread)
2. Track net position (delta) from fills
3. When `|delta| > hedge_threshold`: submit aggressive FOK orders on the **hedge exchange**
4. Result: you earn the spread on exchange A while staying delta-neutral via exchange B

## MMArbConfig

```python theme={null}
config = hz.MMArbConfig(
    quote_exchange="polymarket",
    hedge_exchange="kalshi",
    quote_feed="polymarket",
    hedge_feed="kalshi",
    base_spread=0.04,
    gamma=0.5,
    max_position=100.0,
    hedge_threshold=10.0,
    hedge_aggression=0.01,
    size=5.0,
)
```

| Parameter          | Type    | Default  | Description                        |
| ------------------ | ------- | -------- | ---------------------------------- |
| `quote_exchange`   | `str`   | required | Exchange to quote on               |
| `hedge_exchange`   | `str`   | required | Exchange to hedge on               |
| `quote_feed`       | `str`   | required | Feed for quoting exchange          |
| `hedge_feed`       | `str`   | required | Feed for hedge exchange            |
| `base_spread`      | `float` | `0.04`   | Base spread width                  |
| `gamma`            | `float` | `0.5`    | Avellaneda-Stoikov risk aversion   |
| `max_position`     | `float` | `100.0`  | Max hedge order size               |
| `hedge_threshold`  | `float` | `10.0`   | Delta threshold to trigger hedge   |
| `hedge_aggression` | `float` | `0.01`   | Price improvement for hedge orders |
| `size`             | `float` | `5.0`    | Quote size                         |

## Pipeline: mm\_arb

```python theme={null}
quoter = hz.mm_arb(config)

hz.run(
    name="mm_arb_bot",
    pipeline=[quoter],
    ...
)
```

**Returns `list[Quote]`**: generates quotes for the quoting exchange. Hedges are side-effects via the engine.

## Example

```python theme={null}
import horizon as hz

config = hz.MMArbConfig(
    quote_exchange="polymarket",
    hedge_exchange="kalshi",
    quote_feed="polymarket",
    hedge_feed="kalshi",
    base_spread=0.04,
    gamma=0.3,
    hedge_threshold=15.0,
    size=5.0,
)

hz.run(
    name="cross_venue_mm",
    exchanges=[
        hz.Polymarket(private_key="0x..."),
        hz.Kalshi(api_key="..."),
    ],
    markets=["election-winner"],
    feeds={
        "polymarket": hz.PolymarketBook("election-winner"),
        "kalshi": hz.KalshiBook("KXELECTION-25"),
    },
    pipeline=[hz.mm_arb(config)],
    interval=0.5,
)
```

<Note>
  MM Arb composes existing `reservation_price()` and `optimal_spread()` Rust functions. See the [Market Making docs](/market-making) for details on Avellaneda-Stoikov parameters.
</Note>