difference between bid and offer price?

p81

New Member
#1
Hello everybody . i have noticed there is a large difference between bid and offer price in call options specially in the money and deep in the money calls. And the difference is less from at the money to out of the money calls .Seniors please explain the reason .Thanks
 
#2
The difference in bid and offer price occurs in the options which are not traded
often.Suppose for example, assume that a seller want to sell Tata Steel 700 CA of Dec 2009 at Rs 100(Offer Price),and a buyer of 700 CA Dec 2009 thinks it will be better to take the risk for Rs 10(Bid Price) and since there is limited buyer and seller,the price difference is huge.
Subrata
 

p81

New Member
#3
Thanks Subrata. So than ,is it safe to buy a call deep in the money or not if i am interested to earn premium gains and square off my position?
 

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