Bid-ask spread
The gap between what you are paid and what you are charged. On thinly traded options it eats the profit before you start.
In the chapter
Reading the table of contracts
From the same chapter
- Option chainThe table of every contract on an underlying, by strike and expiration. It is the map: without reading it, picking a strike is guessing.
- Open interestHow many contracts remain open at that strike. Unlike volume it does not reset daily: it says where positions are, not where the rush was.
- Mid priceThe point between bid and ask. A sensible reference for working the entry, not a price that fills by itself.
- Max painThe strike where the largest number of contracts would expire worthless. A statistical observation, not a prediction of where price ends up.