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I didn't check the bid-ask spread, and it cost me

A wide bid-ask spread is a cost you pay going in and again coming out. On thinly traded options it can be bigger than the premium you were trying to earn. Here's how a trade that went your way still lost money, and the quick check that prevents it.

Options guide · 8-minute read · Updated 2026-10-27

What's happening in your account right now

You sold an option. The stock did roughly what you hoped. But when you looked at closing the trade, the buy-back price was strangely high, higher than you'd collected. Or your fill when you sold was far below what the chain seemed to show.

Nothing broke. You ran into the bid-ask spread, the gap between what buyers will pay and what sellers will accept. On busy options it's a few cents. On quiet ones it can be most of the option's price.

Here's what it did to your trade, in numbers.

The spread, worked out (an illustration, not a trade idea)

You own 100 shares of a made-up stock, XYZ, at $30. XYZ's options trade rarely. You sell a 30-day $33 call.

The quote is bid $0.40 / ask $1.20. The Mid price is $0.80. You use a market order, so you fill at the bid: $40 collected.

Two weeks later, XYZ is still near $30. The option has lost value, as you hoped. The quote is now bid $0.20 / ask $0.90, with a mid of $0.55. You decide to close it.

The option lost value. The trade went your way. And the result was −$50, because you paid the full spread twice.

On the busy option, the same plan kept almost all of its value. The only difference was liquidity.

The spread as a tax. Look at the size of that first spread: $0.80 wide on an option with a mid of $0.80. That's a toll equal to the whole fair price. Selling at the bid gave away half of it before the trade even started.

On the wheel strategy, you trade often: a put, maybe a close, another put, a call. Each trip pays the spread. On tight options, that's a small cost you barely notice. On wide ones, it can eat most of what the strategy collects. Our page on how the bid-ask spread taxes option sellers has the full math, and the bid-ask spread cost calculator runs your own numbers.

Why some strikes have huge spreads

Spreads are wide when few people trade an option. The market maker, who quotes both sides, takes on more risk when it can't easily pass the trade on, so it asks for a bigger gap.

Things that make spreads wider:

• A small or quiet company. Fewer traders, fewer options trades.
• Strikes far from the price. Most trading happens near the current price.
• Expiries far out, or odd weekly dates with little interest.
• The first and last minutes of the trading day.
• Fast markets and big news, when market makers widen quotes to protect themselves.

Options liquidity is a feature of the stock, the strike and the moment, all at once.

How to check in thirty seconds

Before you sell any option, look at four things on the Options chain:

If two or more show a warning sign, try a strike closer to the price, a standard monthly expiry, or a different stock. Our checking option liquidity page goes deeper.

What to do with the trade you have

If you're in a wide-spread option now:

1. Don't use a market order to close. Enter a limit at the mid and step toward the ask a nickel at a time. You may not fill at the mid, but you'll rarely fill at the ask.
2. Consider holding to expiry. If the option is likely to expire worthless and you're fine with the shares being called if it doesn't, holding skips the second toll. Check earnings and dividend dates first.
3. Leave a buy-back order sitting. A GTC order at a price you'd accept can fill on its own if a buyer or seller shows up.

And in your journal, record the price you actually got, not the mid. That's the real result.

The rule for next time

Three habits, every trade:

1. Check the spread before you check the premium. A big premium on a wide spread may not be real.
2. Always use a limit order, starting at the mid. See limit vs market orders.
3. Skip options you'd struggle to get out of. Ask yourself: if this goes wrong and I need to close it, what will I really pay? If the answer is the ask on a wide spread, don't open it.

In Canada and the US, every broker shows the bid and ask on its chain. Many Canadian investors trade US-listed options, where the busiest names have the tightest spreads. Options permissions in a TFSA or RRSP differ by broker, so check yours.

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