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The highest price a buyer is willing to pay for an option.
Why It Matters
The bid is what you get when selling an option. If an option shows $2.50 bid / $2.70 ask, you'd receive $250 per contract if you sell now. In fast-moving markets, limit orders above the bid can get filled - but market orders always fill at the bid when selling.
Key Points
- Sell orders fill at the bid price (or better with limit orders)
- Wide bid-ask spreads mean you're giving up more to market makers
- Bid price drops as expiration nears and time value decays
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Common Questions
The highest price a buyer is willing to pay for an option. The bid is what you get when selling an option. If an option shows $2.
The bid is what you get when selling an option. If an option shows $2.50 bid / $2.70 ask, you'd receive $250 per contract if you sell now. In fast-moving markets, limit orders above the bid can get filled - but market orders always fill at the bid when selling.
Sell orders fill at the bid price (or better with limit orders)
Wide bid-ask spreads mean you're giving up more to market makers
Bid price drops as expiration nears and time value decays