Bid Price refers to the highest price that a buyer is willing to pay for an option at a given moment. It represents the demand side of the market. Traders looking to sell an option will usually sell at or near the bid price, which can vary based on market liquidity and volatility.
- Bid Price: Highest price a buyer is willing to pay for an option.
- Seller’s Perspective: Usually receives the bid price when selling an option.
- Liquidity Indicator: Higher bid prices suggest strong market liquidity.
- Spread Impact: Narrow bid-ask spread means active trading, wide means low activity.
- Market Movement: Bid price changes with underlying price and sentiment.
Example:
Suppose the NIFTY 18000 Call Option shows a bid price of ₹98. This means buyers are currently willing to pay ₹98 for that option. A seller who wishes to exit immediately would likely sell at this bid price.