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Explain the Difference between ‘Theoretical Price’ and ‘Quoted Price’ in an RFQ.

The theoretical price is the calculated fair value of the option derived from a pricing model (like Black-Scholes) using current market inputs. The quoted price is the actual price offered by the market maker in the RFQ, which is the theoretical price adjusted by a profit margin that covers transaction costs, risk premium, and the market maker's desired profit.

What Is the Relationship between an Option’s Intrinsic Value and Its Time Value?
How Does the Call’s Strike Price Determine the Maximum Profit Potential?
How Is the ‘Effective Spread’ Calculated, and Why Is It a Better Measure of the Cost of Immediacy than the Quoted Spread?
Why Is the Assumption of No Transaction Costs a Significant Limitation of the Model in Real-World Trading?