The bid price of any security is the highest price that someone is willing to pay for that security.  The ask price of any security is the lowest price that someone is willing to sell that security.  The “theo”, “mark” or “mid” price is simply the bid plus the offer divided by two.

Click the video below as I explain the nuances between these measures.

Follow me on Twitter @MikeShorrCbot

about the author:

Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

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