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RobinMeade

Don't Understand BID/ASK

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Hello everyone

 

When I select let's say PUT->$1.00 Bid then:

 

I am selling it for $1.00 to a buyer?

or

I am buying it for $1.00 from a seller?

 

I read the following statement:

"The Bid price represents the maximum price that a buyer or buyers are willing to pay for a security"

Does that mean $1.00 is the maximum price I am willing to sell for or buy for from seller!?

I can't seem to understand that simple concept!!! :crap:

WHO AM I WHEN I CLICK On: PUT-BID!?

Does the $1.00 represents: seller of the PUT or a buyer!?

 

Thank you for your time!

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When you BID, you are offering money to buy something. When you ASK, you are asking some amount of money to sell something.

 

The BID price is the highest amount of money buyers are willing to spend for the purchase of something. The ASK price is the lowest amount that the sellers are willing to sell something. This is why the BID is less than the ASK price. When the BID price (from a buyer) and the ASK price (from a seller) become equal, you have a sale.

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I might be understanding you incorrectly... so please ask further if I'm not answering your question:

 

Whenever you are selling, you can sell at any price... perhaps you want to sell at the bid price. If that's the case, you can select a BID price and you can sell it at that price to the buyers who have orders at that BID price.

 

For example, when I'm trading futures, I have a Depth of Market window (DOM) open, which has a column listing the BID prices and a column listing the ASK prices.

 

If I click on a price on the BID side, then I will be SELLING at that price to the buyers who have placed buy orders at that price level. If I click on a price on the ASK side, then I will be BUYING at that price from the sellers who have placed sell orders at that pricelevel

 

Make sure you remember:

BID price = the price that buyers are willing to buy something at

ASK price = the price that sellings are willing to sell something at

 

So if you are a seller, you can ONLY sell something if a buyer has a BID open at the price you want to sell at. It won't lead to a sale if I have I am seller selling at $100 but the highest BID price is $99.99. So I would have to click on the $99.99 bid price to make a sale.

Edited by mangolassi

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I might be understanding you incorrectly... so please ask further if I'm not answering your question:

 

Whenever you are selling, you can sell at any price... perhaps you want to sell at the bid price. If that's the case, you can select a BID price and you can sell it at that price to the buyers who have orders at that BID price.

 

For example, when I'm trading futures, I have a Depth of Market window (DOM) open, which has a column listing the BID prices and a column listing the ASK prices.

 

If I click on a price on the BID side, then I will be SELLING at that price to the buyers who have placed buy orders at that price level. If I click on a price on the ASK side, then I will be BUYING at that price from the sellers who have placed sell orders at that pricelevel

 

Make sure you remember:

BID price = the price that buyers are willing to buy something at

ASK price = the price that sellings are willing to sell something at

 

So if you are a seller, you can ONLY sell something if a buyer has a BID open at the price you want to sell at. It won't lead to a sale if I have I am seller selling at $100 but the highest BID price is $99.99. So I would have to click on the $99.99 bid price to make a sale.

 

 

Thank you for your time and patience with me. I just want make sure I totally understand this.

All I want to know is when I sit in front of my computer and open my broker's website and then select

Put-Bid, then I am SELLING

Put-Ask then I am BUYING

 

Call-Bid again selling

Call-Ask buying

 

right?

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Thank you for your time and patience with me. I just want make sure I totally understand this.

All I want to know is when I sit in front of my computer and open my broker's website and then select

Put-Bid, then I am SELLING

Put-Ask then I am BUYING

 

Call-Bid again selling

Call-Ask buying

 

right?

 

 

This seems to be correct. Again, I have no knowledge of options, but from my experience in the DOM, you are right.

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Hello everyone

 

When I select let's say PUT->$1.00 Bid then:

 

I am selling it for $1.00 to a buyer?

or

I am buying it for $1.00 from a seller?

 

I read the following statement:

"The Bid price represents the maximum price that a buyer or buyers are willing to pay for a security"

Does that mean $1.00 is the maximum price I am willing to sell for or buy for from seller!?

I can't seem to understand that simple concept!!! :crap:

WHO AM I WHEN I CLICK On: PUT-BID!?

Does the $1.00 represents: seller of the PUT or a buyer!?

 

Thank you for your time!

 

I had the same confusion once but it got all cleared out finally. The responses you have here so far put it all out clearly,I have nothing more to add to it.

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Bid is what the buyers (either short or long) wanna pay at a certain price. Ask is the price at which the seller wants to sell. If the demand is high then Bid will be higher than the Ask and vice versa.

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