# Bid-Ask at market open, which comes first? [duplicate]

I am trying to get a grasp on how the bid-ask match maker works, in particular for options as there is less volume and fewer market orders. Lets say I own an option, and place a limit sell order for \$10.00 overnight. Now, overnight something happens which causes the stock to pop, and for whatever reason other traders don't see my sell order for \$10.00 and place bids at \$20.00 pre-market open. Now at market open for an instant there is a bid-ask spread of \$20 - \$10. My question is, which takes priority? Is it based on the time the order was placed, even when the market is closed?

## marked as duplicate by Victor, Ganesh Sittampalam♦, JoeTaxpayer♦, GµårÐïåñ, Dilip SarwateFeb 27 '14 at 22:50

When you place a limit sell order of \$10.00 (for a stock on an option) you are adding your order to the book.

Anyone who places a buy at-the-market or with a limit price over \$10.00 will have that order immediately fulfilled through the offer you have placed on the book.

On the other hand, if that other person places a buy for \$8.00, then the spread will now be "\$8.00 bid, \$10.00 ask".

Priority is based on first the price (all \$9.99 asks will clear before \$10.00) and within each bucket this is based on the time your order was submitted.

This is why in bidding markets (including eBay) buying at \$x.01 is way better than \$x.00 and selling at \$x.99 is better than \$(x+1).00.

Source: https://en.wikipedia.org/wiki/Order_(exchange) under "first-come-first-served"

• "This is why in bidding markets (including eBay) buying at \$x.01 is way better than \$x.00 and selling at \$x.99 is better than \$(x+1).00." Do you mean the reverse, costwise, or to increase the chance of being filled? – user11865 Feb 25 '14 at 16:45
• You reduce your profit marginally while increasing the likelihood of the order going through. – William Entriken Feb 25 '14 at 16:46
• Just checking. :) – user11865 Feb 25 '14 at 16:56
• I though that was always the open secret to bidding on eBay, the off-quarter bids :-) – William Entriken Feb 25 '14 at 17:06
• How can the order be fulfilled immediately, since all this is happening while the market is closed? – Nate Eldredge Feb 27 '14 at 18:39

The options market requires much more attention to avoid the situation you're describing.

An overnight \$10 ask will remain on the books most likely as Good-Til-Canceled. The first to bid the low order gets it. If traders are paying attention, which they probably are then they will bid at \$10. If not, they will bid immediately at \$20.

If they crossed the order, it would be filled at their higher than \$10 bid.

This is all governed by the exchange where the ask is posted, and most implement price-time priority.