Bid, ask, midpoint and mark: quotes vs execution prices
The bid and ask define a quoted market; the mid and mark are reference values. Learn how that difference affects an order and its profit.
By OptionsKing. Publisher and editorial methods.
What you will learn
By the end of this lesson, you should be able to:
- Distinguish bid, ask, mid and mark.
- Calculate a spread as a percentage of option value.
- Set a limit and reassess execution costs at exit.
A displayed option value is not necessarily a price at which you can trade. Use the $43 call to distinguish four familiar numbers, calculate the cost of crossing the spread, and plan a limit order with a minimum acceptable credit. Revisit the same distinction when closing the trade.
The four prices
Chipotle (CMG), September 19 $43 call: $0.49 bid, $0.53 ask.
- Bid, $0.49. Sell to that right now and you get $49. Available only while that bid and its displayed size remain; execution is not guaranteed.
- Ask, $0.53. What you would pay to buy it. Irrelevant when you are opening a short, and very relevant when you close one.
- Mid, $0.51. The average. Every calculator on this site uses it, every screenshot quotes it, and it is not an offer from anybody.
- Mark. Your broker's fair-value estimate, usually the mid or something near it. This is what values your position overnight and what your unrealized profit and loss is computed from. It is an accounting number.
Plan with the bid. Hope for the mid. Never plan with the mark.
What the spread costs, as a percentage
The same nickel is a completely different tax depending on where you sell it.
| Contract | Bid | Ask | Mid | Spread | Spread as % of mid |
|---|---|---|---|---|---|
| $40 call | $1.35 | $1.41 | $1.38 | $0.06 | 4.3% |
| $42 call | $0.71 | $0.76 | $0.73 | $0.05 | 6.8% |
| $43 call | $0.49 | $0.53 | $0.51 | $0.04 | 7.8% |
| $44 call | $0.33 | $0.38 | $0.35 | $0.05 | 14.3% |
Selling the $44 call at the bid instead of the mid gives up 2 cents on a 35 cent option. Two dollars, which sounds like nothing. Do it eight times a year and it is $16 against $280 of premium collected, which is 5.7 percent of the year's income handed over for the convenience of not waiting. The full annual arithmetic is on its own page and the number is bigger than people expect.
This is also why the far strikes are worse than the delta suggests. Cheap options have wide spreads in percentage terms, so the strike that already pays too little pays even less after you actually trade it.
Working the order
Do not send a market order on an option. Ever. Options markets are thin enough that a market order on a quiet strike can fill somewhere you would not have agreed to.
What works, on a normal liquid chain:
Start at the mid. Limit sell the $43 call at $0.51. A fill may occur, but a quoted midpoint carries no promise of execution.
Give it a few minutes. Not a few seconds. The order has to be seen.
Then step down one tick. $0.50. Then $0.49 if you have to. Each step is a penny, which is $1 per contract, and it is worth knowing your walk-away price before you start rather than discovering it while you are annoyed.
Decide the floor first. If the trade only works at $0.51 and the market will not come to you, that is information: the premium was not there. Cancel it. The fill page covers what the distance from the mid does to your odds, and the honest finding there is that no source worth quoting publishes a curve for it.
When the spread tells you to walk
A wide spread is not just a cost. It is a signal about who else is here.
The $44 call shows $0.33 bid and $0.38 ask, 12 contracts traded today and 640 open. Those counts do not identify who is quoting or prove the midpoint is unavailable. Inspect current quote size and timestamp, choose a limit, and allow for a wider or less accessible exit market after news.
Rough rule for a premium seller: if the spread is more than about 10 percent of the mid, the strike is not liquid enough and the trade needs to be somewhere else. That single test throws out most of the bad fills before they happen, and a proper liquidity screen formalises it with volume and open interest thresholds alongside.
Closing costs the same spread again
Measure execution against a reference price on both transactions. Selling below the mid and buying back above it each reduce the result compared with mid-based arithmetic. The spread can change between entry and exit, so the opening quote cannot establish the eventual round-trip cost.
The part that gets forgotten. Sell the $43 call for $0.49 and later buy it back at $0.10, and you have crossed the spread twice. On a contract you opened for $49 that round trip cost you the difference between $0.49 and $0.51 going out and between $0.10 and $0.08 coming back, so 4 cents of the 39 cents you actually made. Ten percent.
Which is a quiet argument for letting cheap contracts expire rather than closing them, and a loud one against any management rule that has you trading in and out repeatedly on small credits.
Check your understanding
You sell at $0.49 and later buy back at $0.10. What is realized before fees?
Show the explanation
The difference is $0.39 per share, or $39 per standard contract. That already reflects the two executed prices. Do not deduct an estimated spread a second time; use the mid only to compare actual execution with a reference.
Common questions
Should I use the bid or the mid when planning an option trade?
The bid is a conservative planning reference for selling, not a guaranteed fill at any later time or size. A net limit order sets your acceptable price; the midpoint is a reference, not a price the market must give you.
What is the mark price on an options position?
Your broker's own fair-value estimate, usually at or near the mid, used to value your account and compute unrealized profit and loss. It is an accounting number and no one has to trade with you at it.
How wide is too wide a bid-ask spread on an option?
Judge width in dollars and relative to premium, together with size and activity. The lesson's 10% threshold is illustrative, not a universal cutoff.
Should I use a market order for options?
No. Options books are thin enough that a market order on a quiet strike can fill at a price you would never have agreed to. Use a limit, start at the mid, and know your walk-away price before you send it.
Sources
Rules and thresholds above were checked against these documents on August 4, 2026. Exchange and broker rules change. Confirm anything you are about to act on with your own broker.
Keep reading
Do the math on your own trade
Every price in this article is an illustrative worked example, not a quote. Read Options basics for the rest of the series, and the disclaimer before you act on any of it. Selling options carries real risk of loss, and the loss can be far larger than the premium you collected.