NOK was up 7.1% that day. I worked four sell orders on 12Cs in the early afternoon and filled at $0.38–$0.39.
The bid at the time was $0.37. All four filled above it — that is not luck, that is order placement.
Options have no “current price,” only four numbers. Where you hang your order decides the cost of the trade.
1. Four Prices, Not One
Every option row carries four numbers:
| Price | Meaning |
|---|---|
| Bid | The highest price someone will pay now — you sell into it |
| Ask | The lowest price someone will take now — you buy from it |
| Last | The previous fill, which could be an hour or a day old |
| Mark | The broker’s model value, often the bid/ask midpoint |
The classic beginner error is treating last or mark as “the market,” then posting a price that never fills.
Only bid and ask can fill. Last is history; mark is an estimate.
2. The Spread Is Your Entry Fee
The bid-ask spread is not a commission. It is an implicit cost you pay every time you go in or out, and it is usually dozens of times the commission.
TRON was the extreme case: quotes sat at $0.05 / $0.50.
- Spread per contract: $0.45;
- Closing 23 contracts: 23 × 100 × $0.45 = $1,035;
- Against a position worth about $8,960 — 11.6% of the position, just to go in and out once.
Do nothing, and you still lose 11.6% on a round trip. That is why fat premiums on illiquid names are partly compensation for not being able to leave (the illiquidity premium).
Spread ratio = (ask − bid) ÷ midpoint. Above 5%, be careful. Above 10%, it is not a seller’s market.
3. Where to Hang: Sell Side, Buy Side
Three positions, three costs:
① Hit the bid (aggressive seller): instant fill at the bid. Correct when you must trade now — a stop, an earnings exit.
② Post at the ask (passive seller): wait for a buyer to lift you. Best price, no guarantee of a fill. That is exactly what those four NOK orders did.
③ Post the midpoint: balances price and probability, but on thin contracts the midpoint is often nobody’s price.
For a seller, the default should be posting on the ask side and waiting: you are the one collecting premium, time is on your side, and a few minutes rarely matter. The impatient side is almost always the buyer.
4. Three Liquidity Numbers
- Open interest: how many contracts are alive. Too low (a few hundred) means nobody is playing.
- Volume today: is anyone trading it? A contract with zero volume has decorative quotes.
- Spread ratio: the most direct measure. Above 10%, the round-trip cost already eats the strategy.
Of the three, spread ratio is the one you must check every time. OI and volume can look fine while the spread tells you the truth.
5. Partial Fills and Combo Orders
Partial fill: you post 10, 4 fill, 6 remain. Don’t rush to reprice — first ask whether the remaining 6 still make sense in your position. Four contracts and ten contracts are different risk.
Combo orders: both legs fill together, avoiding a naked leg. The RGTI roll was a single combo: buy back 14.5P, sell 14P, net +$84, one fill (the deep roll).
For sellers, combo orders are a discipline tool: they force you to think both legs through before you send anything.
6. Four Mistakes
One: market orders. A market order on an option hands pricing power to the other side. On a 10% spread, it costs you that 10%.
Two: chasing the fill. Post, don’t fill, reprice lower, repeat. Three repricings means paying the spread three times — and the last fill is usually the worst.
Three: valuing with last. “My contract is worth $0.50” — maybe yesterday. Today’s bid is $0.05, and that is what your position is worth.
Four: ignoring the open and close. The first 30 minutes and last 15 minutes have visibly wider spreads. The same order at midday can cost half as much.
7. When This Framework Doesn’t Apply
- Very deep OTM contracts with near-zero volume. Placement doesn’t matter if nobody is there; the problem is the underlying choice, not the order.
- You are a buyer who must enter now. Event-driven, stop-loss exits — time matters more than spread, but know what you paid.
- Your broker has smart routing or price improvement. Some desks win midpoint fills; realized cost can be better than the visible spread.
8. Seven Questions Before You Send
- What are the bid and ask, and what is the spread ratio?
- Are OI and volume sufficient?
- Do I post on the ask and wait, or hit the bid?
- If it partially fills, do I still want the rest?
- Should the two legs go in one combo order?
- Is it the first 30 or last 15 minutes of the session?
- If it doesn’t fill today, what is my plan?
9. One Line
Direction decides whether you make money; the spread decides how much.
In options, your cost is not the commission. It is where you hang the order.
Related: The illiquidity premium · Selling puts: win rate vs payout · The deep roll
Data & Sources
- Updated 2026-11-13 | First published 2026-11-13
- NOK fills: 1 at $0.39 + 9 at $0.38, bid $0.37 at the time, see the NOK 12C add
- TRON spread: $0.05 / $0.50, 23 contracts → $1,035, position ~$8,960 (11.6%), see the illiquidity premium
- RGTI combo: buy back 14.5P×2 at $2.34, sell 14P JAN 2027×2 at $2.76, net +$84, see the deep roll
Risk Boundaries
Order mechanics and execution costs only; not investment advice. Spreads and liquidity move violently in stress, and there may be no counterparty at all; combo orders can also partially fill. Placement lowers cost; it does not replace a view.