Option Minimum Tick Sizes and the Penny Pilot

Summary

The document explains why an options quote table may show prices in increments of five cents and omit an order entered one cent above the bid. The explanation is that minimum price increments depend on the option class and premium: generally, options below three dollars trade in five-cent ticks, while other series use ten-cent ticks. Classes in the Penny Pilot have smaller increments below three dollars and five-cent increments at or above that level.

The answer infers from the question’s screenshot that the contracts belong to the Penny Pilot and are priced above three dollars, which would explain the five-cent spacing. The inference depends on the specific class and market context; the document does not identify the contract or establish that all option quotes are aggregated this way. Traders should distinguish exchange tick rules from how a particular display groups or reports orders.

Key ideas

• Minimum option price increments vary by premium and option class.
• Penny Pilot classes can trade in smaller increments below the stated premium threshold.
• A five-cent increment for a higher-priced Penny Pilot option can explain why a one-cent improvement is absent from the displayed quotes.
• The proposed explanation depends on the option class and does not establish a universal display rule.

Tags

# Why are option bid and ask option prices aggregated by 0.05


# Why are option bid and ask option prices aggregated by 0.05












I noticed, that the option prices below strike for call and above strike for put options always end with 5 or 0. I tried placing my order with a price of 0.01 above the bid, but I haven't seen it in the table. I expected the table to contain my order with my bid a volume 1. Are the orders aggregated by 0.05?

## Answer by AKdemy (score 4, accepted)

https://quant.stackexchange.com/a/75935

According to CBOE:

> Premium Quotation Stated in decimals. One point equals \$100. Generally, minimum tick for options trading below \$3 is \$0.05 and for all other series, \$0.10. For classes participating in the Penny Pilot Program, the minimum tick for options trading below \$3 is \$0.01 and \$0.05 for options trading at \$3 or above.

Based on your screenshot, it seems it's part of the Penny Pilot Program and trades above \$3

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.