Bid-Ask Spread

The Bid-Ask Spread is the difference between the highest price that a buyer is willing to pay for an asset (the bid price) and the lowest price that a seller is willing to accept (the ask price).

Someone looking to be a seller can find a buyer at the bid price, whereas someone looking to be a buyer can find a seller at the ask price.

It is essentially a measure of market liquidity, as well as a measure of supply and demand. A wide spread may indicate that the market for the underlying is not very active, while a tighter spread may suggest the opposite.

The Bid-Ask Spread is often used in conjunction with options transactions prices in order to try and determine whether the trade was initiated by a buyer or a seller. 

The Bid and Ask price at the time of each transaction is provided in the flow feed. 

Bid-Ask Spread Resources

• Using a variety of data points (including bid ask) to analyze options on Youtube