"Last Trade" Price Outside Of Bid And Ask

Discussion in 'Options' started by Arnie Guitar, Apr 22, 2011.

  1. So I'm sitting here in my hospital room waiting to be discharged, studying some S&P 500 Options to trade next week, and I see so many "Last Trade" prices higher than the ask, and lower than the bid.

  2. Simple, the Last Trade was done at a time when the bid and ask were different then they are shown in your quote.

    I don't know what options you are looking at exactly (i.e. near the money, out of the money, etc) but here is the scenario (using completely made up numbers)

    XYZ is at $100 - 100 call strike is last $200 bid $180 ask $220 - ok this seems correct, right?
    At the very end of the day, XYZ moves up to $100.5, but there are no more trades of that call - last is still $200, but bid is now $210 ask is now $240 for example. The last wasn't done below bid at the time it was done.

    For last higher then ask, just reverse it.

  3. dmo


    I see that 100 shares of xyz are offered at 23.50. I put in an order to buy 500 at 23.50. I get hit on the first hundred. Last price is now 23.50. The offer is now 23.70. I raise my bid on the remaining 400 to 23.55. The offer is still 23.70. I raise my bid to 23.60...

    See how it works?
  4. The option must not be very frequently traded. Check the last trade time and see how long ago it was. The bid/ask may have moved in the meantime.
  5. I long ago gave up with putting the last trade column in my options chain. It was worse than useless, it was distracting and consumed time I should have devoted to making my trades according to my rules.
  6. I agree Howard, except that a lot of brokers use last trade to mark to market, which is annoying in options.
  7. A lot of brokers use last trade to paint the tape :)