Chapter 04 · Section 4.1

Quotes

In order to facilitate the trading process, it is usual on many exchanges for dealers to display two-way quotes: two prices, one to buy and one to sell for the same option series. Which of the following is a reasonable two-way quote?

a) Bid 100, Ask 103
b) Bid 103, Ask 103
• c) Bid 103, Ask 100
  No. The bid (the price at which the dealer is ready to buy) is higher than the ask (the price at which the dealer is ready to sell).

(Click here for help)