Another factor to keep in mind is that derivative transactions can entail substantial trading costs. If an option is quoted as 5 bid–5¼ asked, it means you buy the option at 5¼, whereas if you sell it, you get only 5. That ¼ point spread is a 5 percent transactions charge on the purchase or sale of that particular instrument (a so-called round-trip transaction) and does not include brokerage commissions.
