How Does the Underlying Asset’s Volatility Affect the Options Bid-Ask Spread?

High volatility in the underlying asset increases the uncertainty of its future price, which increases the risk for market makers who are quoting options prices. To compensate for this higher risk, market makers widen the bid-ask spread on the options contract.

A wider spread means a higher cost of transacting and a greater potential for slippage when an order is executed.

How Does a Reduction in Liquidity Affect Market Making Activities?
How Does a Market maker’S’inventory Risk’ Directly Cause the Bid-Offer Spread to Widen during High Volatility?
How Does a Wider Bid-Ask Spread on an Altcoin Affect Option Pricing?
What Is the Impact of Low Liquidity on the Bid-Ask Spread?
How Do “Greeks” like Gamma and Vega Influence a Market Maker’s Spread Adjustments?
What Is the Difference between ‘Historical Volatility’ and ‘Implied Volatility’?
How Does the Bid-Ask Spread on an Option Relate to Its Implied Volatility?
How Does an Increased Bid-Ask Spread Affect Market Liquidity for an Option?