US equity options are trading about 35.2 million contracts a day in 2026, up 13% on 2025, according to the OCC. Nvidia alone accounts for roughly 3.5 million a day (TradeStation, as of July 31, 2026). In a market that deep, the price you see on the screen is close to the price you get. Step a few strikes away, or onto a smaller stock, and it can be 10% or 20% off before the trade has done anything. That gap is the bid-ask spread, and it is the one options cost most investors never add up. If you are new to how calls and puts work, start with options basics for tech investors.
What is the bid-ask spread on an option?
The bid-ask spread is the difference between the bid, the highest price someone will pay, and the ask, the lowest price someone will sell for. If a call shows 2.10 bid and 2.30 ask, you can sell it now for $2.10 or buy it for $2.30. The spread is $0.20, or $20 per contract, because each contract covers 100 shares.
The mid price is halfway between: $2.20. Think of the mid as a rough fair value, and the spread as the toll you pay to a market maker for trading immediately. If you buy at the ask and sell at the bid later, you pay the full spread across the round trip, even if the option’s fair value never moves.
Market makers quote both sides and earn the spread in exchange for taking the other side of your trade and hedging it. The spread they show reflects how hard and risky that hedge is. A near-the-money Apple call they can hedge instantly with shares gets a tight quote. A far out-of-the-money call on a small company with a thin share market gets a wide one.
How do you measure whether a spread is wide or tight?
Measure it as a percent of the mid price, not in cents: spread % = (ask − bid) ÷ mid. A five-cent spread is trivial on a $10 option and enormous on a $0.08 one.
Chart 1 shows five illustrative quotes. The mega-cap at-the-money call at 9.80/9.85 has a spread of 0.5% of mid. The far out-of-the-money weekly at 0.05/0.10 has a spread of 67%: buy it at the ask and it must rise 100% just to sell at the bid you started from. Those cheap-looking contracts are often the most expensive to trade.
| Spread % of mid | What it means | Typical example |
|---|---|---|
| Under 2% | Tight; trade normally with a limit at mid | Near-the-money Mag 8 and SPY/QQQ options, first few expiries |
| 2% to 5% | Workable; start at mid, step slowly | Large caps outside the Mag 8; Mag 8 strikes further out |
| 5% to 10% | Thin; trade smaller, be patient | Mid caps, LEAPS, far strikes |
| Over 10% | Expensive; change strike or expiry, or use the stock | Small caps, deep out-of-the-money weeklies |
Why do Mag 8 options have the tightest markets?
Mag 8 options are tight because huge share volume and huge options volume make them cheap and safe for market makers to hedge. When a dealer sells you an Nvidia call, they can buy NVDA shares within a fraction of a second at a penny-wide quote. Competition among dealers then pushes the option quote toward that hedging cost.
Four things combine on the largest names:
- Volume: Nvidia averaged about 3.5 million contracts a day, Tesla 2.6 million and Apple 1.5 million as of July 31, 2026, per TradeStation.
- Penny pricing: classes in the exchanges’ Penny Interval Program can quote in $0.01 steps under $3 and $0.05 steps at $3 and above, versus $0.05 and $0.10 for classes outside it, per Cboe. The program is limited to the most actively traded classes, which includes all of the Mag 8.
- Many expiries: weekly and monthly series, and since January 2026, Monday and Wednesday expiries on the largest qualifying stocks, spread activity across more dates that are each still deep.
- Two-sided flow: income sellers, hedgers and speculators all trade the same names, so dealers rarely end up stuck on one side.
That is why we build most income and hedging ideas on these stocks; the full menu is in options strategies for Mag 7 stocks, and the group itself is profiled in the Magnificent 8 stocks.
What do open interest and volume tell you about liquidity?
Volume is how many contracts traded today. Open interest is how many contracts were still open at the end of the previous day. Volume tells you whether people are trading this strike now; open interest tells you whether a market has built up there over time.
Check both at your strike and expiry, not for the stock as a whole. Nvidia trading millions of contracts a day does not help you if you want a strike 40% out of the money two years away, where open interest may be a few hundred contracts and the spread 10% wide.
Two practical readings:
- High open interest, low volume today: an established strike on a quiet day. The quote may look wide, but a limit at mid often fills.
- Low open interest, high volume today: new interest, often around news. Spreads may be tight now and widen once the flow stops.
Open interest also matters when you need to exit. If you are the only meaningful holder of a strike, you will sell to a market maker at their price.
How do you get filled at or near the mid price?
Use a limit order at the mid, then move it in small steps if it doesn’t fill. Never send a market order for an option: it fills at the best available price at that instant, which on a wide or fast-moving quote can be far from fair value. The SEC’s Investor.gov explains the difference between market and limit orders.
- Read the quote: note bid, ask, mid and spread % of mid.
- Place a limit at mid (or one cent better for you on a very tight market).
- Wait 30 to 60 seconds. On liquid options, dealers often fill at or near the mid.
- Step 10% to 20% of the spread toward the other side if it doesn’t fill. On a 2.10/2.30 quote, move from 2.20 to 2.18 when selling, then 2.16.
- Stop at a price you decided in advance. If the fill would be worse than that, skip the trade or change the strike.
For multi-leg trades such as spreads, collars and iron condors, send one net-price order for the whole structure rather than legging in. Each leg’s spread looks wide alone, but dealers price the package, and the net mid is often fillable. Our comparison of vertical spreads and iron condors walks through pricing a combo.
If you need to give up more than a quarter of the spread to get filled on a liquid Mag 8 option, something has changed: a news event, a fast market or the open or close. Pause and look again.
How much do wide spreads cost you over a year?
Spread costs look small per trade and add up fast with repetition. A monthly covered-call program is the clearest example, because you trade 12 times a year, and more if you roll.
Chart 2 assumes you sell a call each month worth 2% of your position. If you fill at the bid instead of the mid, you give up half the spread on each sale. If you also buy back or roll at the ask, you give up the full spread. The arithmetic for one year:
| Spread % of mid | Open only (half spread) | Open and roll (full spread) | Dollar cost, full spread |
|---|---|---|---|
| 1% (Mag 8, near the money) | 0.12% | 0.24% | $2,400 |
| 5% | 0.6% | 1.2% | $12,000 |
| 10% | 1.2% | 2.4% | $24,000 |
| 20% | 2.4% | 4.8% | $48,000 |
The premium itself is about 24% of the position a year in this example, so a 10% spread paid in full eats a tenth of the income. That is the difference between a program that beats holding the stock and one that doesn’t. It is also why our covered call strategy work stays on liquid strikes.
The worst fills come from market orders at the open and in the last minutes before the close, and from rolling a deep in-the-money option with little time value left. Quotes are widest then, and a market order takes whatever is there.
When do option spreads widen?
Spreads widen whenever a market maker’s hedge gets harder or riskier. Watch for:
- The first minutes after the open, while the underlying price settles.
- Earnings and major news, when the next move is large and unknown.
- Macro releases such as CPI and Fed decisions.
- Far strikes and long expiries, including LEAPS, where few people trade.
- Expiration day, for options near the strike, where gamma is extreme; see what 0DTE options are for why.
If your trade is not time sensitive, wait an hour after the open and avoid the hour around a scheduled release.
How do you check an option’s liquidity before you trade?
Run four numbers through Chart 3. If two of them land in the bottom rows, change the strike or expiry, or trade the stock or an ETF instead.
- Spread as a percent of mid.
- Open interest at your strike and expiry.
- Today’s volume at that strike.
- Strike spacing and tick size: penny or nickel increments.
- The calendar: earnings, macro data or expiry before you plan to exit.
- Your limit price and your walk-away price, written down before you send the order.
Frequently asked questions
What is a good bid-ask spread for options?
As a rule of thumb, a spread under about 2 percent of the mid price is tight, 2 to 5 percent is workable, 5 to 10 percent is thin and above 10 percent is expensive. Near-the-money options on the largest stocks and index ETFs are often under 1 percent.
Why is the bid-ask spread so wide on some options?
Spreads widen when few people trade the contract, when the underlying stock is volatile or illiquid, when the strike is far from the current price, when the expiry is far away, and around news such as earnings. Market makers widen quotes to cover the risk of holding a position they cannot easily hedge.
Should I use a limit order or a market order for options?
Use a limit order. A market order fills at whatever the best available price is, which on a wide or fast-moving quote can be far from fair value. A limit order at or near the mid price lets you control the price, and you can adjust it in small steps if it does not fill.
What is the difference between open interest and volume?
Volume is the number of contracts traded today. Open interest is the number of contracts still open at the end of the previous day. High volume shows activity now; high open interest shows an established market at that strike. Liquid options usually have both.
Do options fill at the mid price?
Often, on liquid options. Market makers frequently fill limit orders at or near the mid on actively traded contracts, especially for small sizes. On thin options you may need to move your limit toward the bid when selling or toward the ask when buying.
How much does the bid-ask spread cost over a year?
It depends on how often you trade. Selling a monthly call worth 2 percent of your position and paying the full spread on each trade costs about 0.24 percent a year at a 1 percent spread, but about 2.4 percent a year at a 10 percent spread, based on illustrative Proflex math.
Key takeaways
- Measure the spread as a percent of the mid price, not in cents: (ask − bid) ÷ mid.
- Under 2% is tight, 2–5% workable, 5–10% thin, above 10% expensive.
- Check open interest and daily volume at your strike, not just for the stock.
- Always use limit orders; start at the mid and step in small increments.
- Spread costs compound: a monthly income program on a 10% spread can lose about 2.4% of the position a year.
- Mag 8 and index ETF options near the money are the cheapest to trade; far strikes and LEAPS are not.
- Spreads widen at the open, near the close and around news; avoid trading into those windows when you can.
Sources and method
- SEC Investor.gov, Types of Orders — how market and limit orders execute
- Cboe, Penny Interval Program annual review — $0.01 and $0.05 minimum price increments and class selection
- OCC, August 2026 Monthly Volume Report — US equity options average daily volume, 2026 year to date
- TradeStation, What Are the Top Stocks for Options Trading? — single-stock options volume as of July 31, 2026
- OCC, Characteristics and Risks of Standardized Options — how listed options trade and the risks of illiquid markets
- FINRA, Options — options risks and account approval
Quotes in Chart 1 and the worked examples are illustrative, chosen to look like typical trading-day quotes; they are not live data. The annual-cost math in Chart 2 assumes 12 monthly options each worth 2% of position value, filled at the worse side of the quote instead of the mid. The liquidity ladder is a Proflex rule of thumb, not an exchange standard.