OK. Newby question warning!! What price is smart to use when valuing an existing position? The most recent trade is easiest, but in a spread it seems more realistic to use the Ask for the legs where the position is long and the Bid where the position is short since these are probably closer to the prices you would actually have to pay/receive to close out the position at this moment.
Yes, that's the most honest way of doing it - using the actual prices where you can get out. That way you're not kidding yourself. But if the bid-ask spreads are unusually wide, you can probably use prices somewhere in-between. If the market is 3.00 bid at 4.00, you might be able to use 2.20 bid at 3.80 or even 2.25 bid at 2.75 for a "real" market. One way to tell is to see how the quote-bot reacts if you better its bid or offer. For example, if the market is 3.00 bid at 4.00, try bidding 3.10 for one. Very often you'll suddenly see that option is 3.10 bid for 11 - the quote-bot is matching your bid with a ten-lot. Go up to 3.20 bid for one and see if it matches you there too. Where it stops matching you - the previous bid is the real bid. You can find out the real offer the same way. Of course, there's a possibility you'll get hit.
Actually, you would use the bid price for long positions and ask price for short and not the other way around as you wrote. You can also use the mid-point.