A market order buys or sells immediately at the best available price on the market right now, no matter what that price is.
How It Works
You want to buy a call option. You place a market order. Within seconds, it fills at the current asking price (which might be slightly higher than the bid you see quoted).
Pros
- Speed: Fills instantly
- Certainty: You know the order will execute
- Simplicity: Just click "buy" or "sell"
Cons
- Worse Fills: You pay the ask (for buying) or get the bid (for selling)
- Slippage: The actual price might be worse than quoted
- Illiquid Options: Spreads are wider on less-traded options, so slippage is worse
When to Use
- Closing losing positions quickly (get out now, don't waste time)
- Very liquid options (tight bid-ask spread)
- When speed matters more than price
When NOT to Use
- Illiquid options (spreads too wide, slippage kills you)
- When you have time to wait for better prices
- Entering speculative trades (use limit orders instead)
Better Alternative: Limit Order
For most options trades, use limit orders instead. You'll get better fills and control your price.
Related: Limit Order, Order Types, Bid-Ask Spread
