How Does the Bid-Offer Spread Impact the Profitability of an Options Trading Strategy?

The bid-offer spread represents a transaction cost that reduces the potential profit of an options trade. Strategies involving frequent trades, like scalping, or those requiring simultaneous execution of multiple legs, such as spreads, are highly sensitive to the spread.

A wide spread can turn a theoretically profitable strategy into a loss due to the cumulative cost of entering and exiting positions.