Why is the bid on my put credit spread zero when each leg has a positive bid?

Question

I am trying to setup a put credit spread on robinhood and my bid keeps showing zero. I’m not sure how or why this happens. As I am new to trading options any help would be appreciated.

the stock(bb) is currently trading at 5.93. the strike price for the sell is $10.5 and for the buy leg is $10. The bid ask for the sell leg is 4.25 x 54 and 6.60 x 45. The bid ask for the buy leg is 2.42 x 78 and 5.05 x 66. the mark is 5.43 for the sell leg and 3.74 for the ask leg. the previous close is 4.85 (sell leg)and 4.35(buy leg).

the expiration is dec 27, 2019.

Answer 1

You have provided insufficient information to provide an accurate answer. What's needed are the details of each option (bid, ask, strike price and expiration) and the security's price.

EDIT: PER THE INFORMATION THAT YOU ADDED:

Here's a less confusing way to depict the prices:

XYZ = $5.93

12/19 $10.50 put = $4.25 x $6.60 (54x45)

12/19 $10.00 put = $2.42 x $5.05 (78 x 66)

There are multiple problems here.

For a bullish put credit spread, you sell at the bid of the higher strike and buy at the bid of the lower strike. So the math is:

• $4.25 - $5.05 = - $0.80 (negative) which means that you'd pay 80 cents for the chance to make 50 cents on the spread (LOL)

I have no idea how Robinhood handles things but I'd surmise that they are defaulting to zero.

Absurdly wide spreads like this occur for two reasons. Either the options are so illiquid that there's practically no one trading them and/or you're looking at closing quotes which often widen a lot because traders are pulling their unfilled orders at the end of the day.

The previous close is unreliable information. It's usually the last trade which for illiquid options could have been minutes before the close (nearer to reality) or days ago when the stock was at a different price.

Based on your closing data, these appear to illiquid options. If that is actually true (check the width of the B/A spread and the Open Interest during regular hours) then I'd advise you to avoid such options at all costs because the wide spreads will take away any opportunity to close the trade before expiration.