What Is the Definition of the ‘Bid’ and ‘Ask’ Prices in Options Trading?

The 'bid' price in options trading is the highest price a potential buyer is currently willing to pay for a specific option contract. The 'ask' price, also known as the offer, is the lowest price a potential seller is currently willing to accept for the same contract.

The bid and ask prices are continuously quoted by market makers and reflect the immediate supply and demand for the option. The difference between the two is the bid-ask spread, which is a key measure of the contract's liquidity.