Ask Price refers to the lowest price at which a seller is willing to sell an option at a given time. It represents the supply side of the market. Traders looking to buy an option will usually pay the ask price or close to it. The ask price, along with the bid price, helps form the bid-ask spread, which shows the liquidity and trading activity of an option.
- Ask Price: The minimum price a seller agrees to accept for selling the option.
- Buyer’s Perspective: Buyers usually purchase an option at the ask price.
- Impact on Cost: A higher ask price means a higher entry cost for buyers.
- Ask and Liquidity: A narrow bid-ask spread means better liquidity; a wide spread suggests low liquidity.
- Fluctuation: Ask prices move quickly based on market demand, volatility, and underlying asset price changes.
Example:
Suppose the NIFTY 18000 Call Option shows an ask price of ₹102. This means sellers are ready to sell the option at ₹102, and a buyer wanting to purchase immediately would have to pay around this price.