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The Bid/Ask Spread

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Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

When looking at a potential trade, what is considered a small bid/ask spread?

Since stocks have a wide range of prices today, some spreads may look large, but actually are still liquid. How large of a spread should we be targeting?

Generally, a bid-ask spread of 1% of the option’s mid-price signals that the options are liquid.

To get an even better price, try entering the order at mid-price and adjust from there if you don’t get filled.

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