What is the natural price?
In one line: The natural price is the price that fills immediately: the bid when you're selling an option, the ask when you're buying. It's certain and usually worse than the mid.
How it works
"Natural" is broker slang for the price already on the screen. If you're selling, the natural is the bid: someone is bidding it now, so you fill now. If you're buying back, the natural is the ask.
The Mid price is the halfway point, where you might fill after a wait. The natural is the sure thing. The gap between them is half the bid-ask spread, and that's what you pay for certainty.
Some platforms label the order-ticket buttons "Natural" and "Mid" for exactly this reason. In the wheel strategy, a seller who always hits natural gives up half the spread on every open and every close.
An example (hypothetical)
XYZ trades at $50 (an illustration, not a trade idea). You own 100 shares at $50. The 30-day $55 call shows bid $0.80 / ask $1.20. The natural for you is $0.80. The mid is $1.00.
| XYZ at expiry | Sold at the natural ($0.80) | Sold at the mid ($1.00) |
|---|---|---|
| $42 | −$800 + $80 = −$720 | −$800 + $100 = −$700 |
| $50 | +$80 | +$100 |
| $60 | Called away at $55: +$500 + $80 = +$580 | +$600 |
Twenty dollars in every row, for a fill that took no waiting. Then, if you buy the call back to close, the natural is the ask, and you pay the other half of the spread too.
Why it matters for sellers
The natural is the right choice sometimes. If the spread is a few cents, the difference is pennies and waiting gains nothing. If the stock is moving fast and you need to close now, certainty is worth the cost.
The mistake is making it the habit. A wide spread means a thin market, and a thin market punishes natural fills twice: on the way in and on the way out. If the natural and the mid are far apart, the honest answer is often to pick a more liquid stock, not a faster button.
Use a Limit order (options) at the mid, give it a few minutes, then walk it toward the natural if it hasn't filled. Our chain guide shows how to read the bid and ask before you decide.
Questions
Is the natural price the same as a market order?
Close. A market order takes whatever's there, which is usually the natural but can be worse if the quote moves. A limit order at the natural fills at that price or not at all.
Why does the natural price cost more than the mid?
Because you're taking the other side's price instead of meeting in the middle. The difference is half the spread, paid once to open and once to close.
When should a seller use the natural price?
When the spread is tight, or when getting out now matters more than a few dollars. On wide spreads it's expensive, and a sign the option is thin.
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