Ask vs Bid Options: Everything You Need To Know
For an option, the bid is the highest price a buyer in the market is currently willing to pay, and the ask is the lowest price a seller is currently willing to accept. If you buy at market you pay the ask; if you sell at market you receive the bid. The difference between them is the bid-ask spread, which is a trading cost: on an option quoted $2.00 bid and $2.20 ask, buying and immediately selling one contract (100 shares) would cost $20 before commissions.
Why the bid-ask spread matters for options
Option spreads are often wider than stock spreads, especially for contracts with low volume or open interest, far out-of-the-money strikes, and distant expirations. A wide spread means you start each trade at a loss equal to part of the spread, which matters most for short-term trades and multi-leg strategies that cross several spreads at once.
How to trade inside the spread
- Use limit orders. Placing a limit order at or near the midpoint (halfway between bid and ask) often gets a better fill than a market order.
- Favor liquid contracts. Strikes and expirations with higher volume and open interest usually have tighter spreads.
- Check the spread as a percentage of price. A $0.10 spread on a $5.00 option is 2%; on a $0.50 option it is 20%.
Call and put basics
A call option gives the holder the right, but not the obligation, to buy shares at the strike price before expiration; a put gives the right to sell at the strike. A call has intrinsic value when its strike is below the stock price, and a put when its strike is above it. Buyers of options can lose the entire premium they pay.
Tracking bid and ask with MarketXLS
MarketXLS is an Excel add-in that returns bid and ask prices as formulas. =Bid("AAPL") and =Ask("AAPL") return the current quote for a stock, and the same functions work with an option symbol built by =OptionSymbol(...); =QM_GetOptionChain("AAPL") returns bid, ask, volume and open interest for every contract. Options data is end-of-day on the Standard plan and real-time on the Advanced and Business plans; see pricing. This article is educational and not investment advice.