How Does an Options Market Maker Hedge the Risk from a Large RFQ on BTC?

A market maker primarily hedges the delta risk from an option trade by taking an opposite position in the underlying asset, BTC. For a large RFQ, they will immediately buy or sell the required amount of BTC on a spot or futures exchange to maintain a delta-neutral or near-neutral book.

Gamma and Vega risks are typically managed through dynamic delta hedging and trading other options or futures. This reduces directional exposure.