Bid-Ask Spread

The bid-ask spread is the gap between the bid — the highest price a buyer will currently pay — and the ask, the lowest price a seller will currently accept. Market orders typically fill near the ask when buying and near the bid when selling, so the spread itself is a real cost paid on every entry and exit, even if the option's value hasn't moved at all. Spreads tend to be narrow on heavily traded, near-the-money strikes and wider on distant strikes or thinly traded stocks. Placing a limit order near the midpoint, rather than accepting the ask or bid outright, is a common way traders try to claw back some of that cost.