What Is “Price Slippage” and How Do Iceberg Orders Help to Mitigate It in Options Trading?

Price slippage is the difference between the expected price of a trade and the price at which it is actually executed. For large orders, the act of buying or selling can exhaust available liquidity at the desired price, forcing subsequent fills at worse prices.

Iceberg orders mitigate this by breaking the large order into smaller pieces. This prevents the market from seeing the full demand or supply, reducing the immediate price pressure and allowing the order to be filled closer to the initial expected price over time.