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I am trying to sell C (citi) call options expiring 2013 Jan at $5.00 in 2 different modes.

Calendar spread mode: Bid Price is $0.24

Covered call mode: Bid Price is $1.01

1)Why is there a difference in the option bid value?

2) Does the software tool have bugs or am I understanding something wrong?

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  • It could be at 0.24 is the Bid price of the 'Spread', and not just the covered call leg.
    – Victor123
    Commented Oct 29, 2014 at 14:46

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First - You posted this on a Sunday night, option bid/asks are often not accurate outside of normal trading time. Right now - 12:15 EST - C is $4.88 and the $5 call is running huge volume with a bid/ask at .99/$1.00. Very tight spread, other strikes are near 20 cent spread.

Can't answer where that .24 came from. Spreads should not produce different bid/ask, although on large bid/ask differences, you may get filled at a lower debit than the bid/asks add up to. (If example is needed here, a comment will prompt me to edit in.

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  • Hi Joe: I am doing SELL TO OPEN on C at exactly the same strike price. The software I am using gives me different bid prices as premiums - higher bid price for covered call and lower bid price for calender spread. So I do not know how much premium I will receive for either case. I think I should receive the same premium. Is that not the case?
    – user2494
    Commented Jan 24, 2011 at 22:25
  • Is this a spread issue??? The bid price itself seems different.
    – user2494
    Commented Jan 24, 2011 at 23:53
  • I understand what you are trying to do. The bid/ask should be the same for an option purchase or sale separate or part of a spread.
    – JTP - Apologise to Monica ♦
    Commented Jan 25, 2011 at 2:13
  • Thank you Joe. Also one more question. I heard usually there is no arbitrage in basic option strategies. However could we combine options and gain something? When I played with the software some combinations does not seem to have any loss. One way to interpret this is the following: If there is a sure way to lose money, the negative of that way should be a sure way to win money.
    – user2494
    Commented Jan 25, 2011 at 2:16
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    I am old (48) and have been playing options for nearly 30 years. Not very often, I pick and choose carefully. See my article tinyurl.com/5ux8gc9 about a winning Gold play using options. I suggest you look at option tables and study the difference between strikes. There are times you'll find some decent opportunities.
    – JTP - Apologise to Monica ♦
    Commented Jan 25, 2011 at 4:32

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