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The real-time list of all resting buy and sell orders at each price level for a given option contract. Visible depth shows available liquidity and potential support/resistance.
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Key takeawayThe order book shows you where real orders are sitting. Depth at a price level indicates how much volume is available before the price moves. Thin books mean slippery fills.
💡 Why It Matters
The order book shows all resting orders at every price level. It reveals where real buying and selling interest exists — not just the best bid and ask, but the depth behind them.
⚙ How It Works
Buy orders stack on the bid side; sell orders stack on the ask side. Each price level shows the quantity available. The gap between the highest bid and lowest ask is the spread. Deeper books mean more liquidity.
📋 Example
SPY $580 put order book: 200 contracts at $2.80, 150 at $2.79, 300 at $2.78 on the bid side. If you sell 200 contracts at $2.80, the bid drops to $2.79. The book tells you how much you can trade before moving the price.
⚠ Common Mistakes
Taking the order book at face value. Displayed orders can be pulled (quote fading), and hidden orders exist that don't show on the book. The book is indicative, not guaranteed.
❓ FAQ
What is Order Book?
The real-time list of all resting buy and sell orders at each price level for a given option contract. Visible depth shows available liquidity and potential support/resistance.
Why does Order Book matter for premium sellers?
The order book shows you where real orders are sitting. Depth at a price level indicates how much volume is available before the price moves. Thin books mean slippery fills.
How does Order Book work?
Buy orders stack on the bid side; sell orders stack on the ask side. Each price level shows the quantity available. The gap between the highest bid and lowest ask is the spread. Deeper books mean more liquidity.
What are common mistakes with Order Book?
Taking the order book at face value. Displayed orders can be pulled (quote fading), and hidden orders exist that don't show on the book. The book is indicative, not guaranteed.
Related Terms
60/40 Tax Treatment
The favorable tax split for Section 1256 contracts: 60% of gains are taxed at the long-term capital gains rate and 40% at the short-term rate, regardless of ...
Adjusted Option
An option whose terms have been modified due to a corporate action — stock split, special dividend, merger, or spinoff.
All-or-None Order
An order that must fill completely or not at all, but unlike FOK, it can wait in the book for a complete fill rather than canceling immediately.
American-Style Option
An option that can be exercised by its holder at any time from listing until expiration.
This is not financial advice. Read our full investment disclaimer.