How Do Greek Letters, Specifically Delta, Influence a Market Maker’s Quote Spread?

Delta measures the sensitivity of an option's price to a change in the underlying asset's price. Market makers use Delta to calculate their directional exposure (how much their inventory will gain or lose if the underlying moves).

A large net Delta position, whether positive or negative, increases the market maker's risk, often leading them to widen their quote spread to compensate for the higher hedging cost and risk exposure. They aim to keep their overall portfolio Delta-neutral or within defined limits.