When bid/ask is different for a single option in a chain?

Discussion in 'Options' started by TrustyJules, Sep 26, 2018.

  1. Yesterday I had two positions where the bid/ask spread on one of the options was really bizarre. The one that is still easily visible is the eBay put oct19/oct26 35 strike calendar.

    The bid/ask for Oct19 is fine but on the Oct 26 it is really weird:

    • P 34 1.87/1.94 IV 36% (OI 1040)
    • P 35 0.91/2.98 IV 0% (OI 53)
    • P 36 1.32/5.05 IV 15% (OI 2)
    • P37 2.59/4.7 IV 0% (OI 57)
    This isnt just end of day variances - it persisted through the day and hence my put calendar shows a whopping loss as the Oct19 one is priced correctly. The same thing happened on my LLY position where I have a C OCT26 109 position that during the portion of the day that the stock was up practically a full dollar (which should have been a big plus for me) the bid ask spread on that option was huge 0.98/3.15 at some point whereas all other positions had bid/ask differences below 30 cents. The huge spread persisted until the stock retreated from its high after which the gap closed. By that time however my position moved out of profit again.

    I am not conceited enough to really fill victimised but the situation does seem illogical. If all bid/ask spreads widen that makes sense as some uncertainty may be at the bottom of it. Why would it occur on a specific option though?
  2. Robert Morse

    Robert Morse Sponsor

    You are looking at bad data. This is from yesterday close.

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  3. Thanks for looking - that is Oct19 chain though - the one where i have an issue is the Oct26 one
  4. Robert Morse

    Robert Morse Sponsor

    Then you are viewing wider markets at end of day for a weekly that is not active yet.

  5. Honestly that spread was there all trading day yesterday - lets see how it opens.
  6. Robert Morse

    Robert Morse Sponsor

    ITM puts are always wider and more so in off weeks.
    TrustyJules likes this.
  7. I understand that but why for one option in particular - the 34 spread is fine.?
  8. guru


    I see this every day on option chains on many stocks. Usually happens on weeklies since they’re not as liquid as monthly options. But this doesn’t mean that you may not be able to buy or sell spreads and other combos at closer to their fair value, minus some slippage (though sometimes slippage can be large). Sometimes when I see prices so off, I use one account to try to buy more of them cheap, while another account to sell the ones I have for more than they’re worth - basically setting my own bid & ask. Usually nothing will happen except for the option chain straightening and bids/asks tightening.
    Last edited: Sep 26, 2018
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