The Bid-Ask Spread in Options

By Dennis Bosmans · Updated June 2026 · 3 min read · Risk disclaimer

The bid-ask spread is the gap between what buyers will pay and what sellers will accept. On options it is often wider than on stocks, and because it is paid on every entry and exit, it quietly becomes one of the biggest costs a trader faces.

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What the spread is

The bid is the highest price a buyer is currently willing to pay; the ask (or offer) is the lowest price a seller will accept. The difference is the spread, and the mid-price between them is the fair value most traders aim for.

When you buy at the ask and later sell at the bid, you pay the full spread as a round-trip cost — before the option has to move at all just to break even.

Why option spreads are wider

Options are less liquid than the underlying stock because trading is split across many strikes and expirations. Each individual contract has fewer buyers and sellers, so market makers quote a wider spread to be compensated for the risk of holding it.

Spreads widen further on far out-of-the-money strikes, on long-dated options, and on names with low open interest. They tighten on liquid, near-the-money contracts that trade heavily — which is exactly where you want to be.

Trading the spread well

Use limit orders, not market orders. Placing your order at or near the mid-price often gets filled and saves you a meaningful slice of the spread compared to simply hitting the bid or lifting the ask.

Favour liquid contracts with tight spreads, and be especially careful with multi-leg strategies, where you pay a spread on every leg. A few cents per leg adds up fast across four legs and many trades.

Worked example. An option is quoted $1.10 bid / $1.40 ask — a 30-cent spread. Buy at $1.40 and sell at $1.10 and you have lost $0.30 (×100 = $30 per contract) to the spread alone. Place a limit at the $1.25 mid instead and, if filled, you cut that cost roughly in half.

Key takeaways

The spread is the gap between the bid and the ask — a cost paid on every round trip.
Option spreads are wider than stock spreads because each contract is less liquid.
Spreads are widest on far-OTM, long-dated and low-open-interest contracts.
Use limit orders near the mid-price and favour liquid contracts to keep the cost down.

Frequently asked questions

Why is the bid-ask spread so wide on some options?

Liquidity is spread thin across many strikes and expirations, so individual contracts have fewer buyers and sellers. Market makers widen the spread to be paid for that risk — most on far-OTM, long-dated, and low-open-interest options.

How do I avoid paying the full spread?

Use limit orders placed at or near the mid-price rather than market orders, and trade liquid, near-the-money contracts with tight spreads. This can save a large share of the spread on every trade.

Does the spread matter for multi-leg strategies?

Yes — you pay a spread on each leg, so a four-leg strategy can cost four spreads. Sticking to liquid strikes and using limit orders on the whole combo keeps these costs manageable.

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