How Is the Bid-Ask Spread Calculated for an Options Contract?

The bid-ask spread for an options contract is the difference between the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask). It is a direct measure of the contract's liquidity and the market maker's compensation for providing that liquidity.

The spread is usually quoted in currency units or as a percentage of the option's mid-price. A wider spread indicates lower liquidity and higher potential slippage.