Mfcttrf

I am looking at MDB LEAPs. Right now the price of the stock is up about 7% from open. Some calls are up, and some puts also show up, which I guess is because they haven't traded today (I am using barchart.com as the reference.) So I think what I am seeing is not the true price (some calls are still "down" even though the stock price is up.)

If I want to buy an option that hasn't traded today (or during the past few days), do I have to guess the price (or try and derive it via a model), or do I have to wait for someone else (a market maker) to establish the price?

There is no "true price". There is the last price an option traded at — but as you have discovered, if a particular option is thinly traded (and many options are thinly traded) then the last price quickly gets stale and isn't useful for informing what price you might actually fill at for an order you're contemplating.

You need to look instead at the quoted bid and ask prices. If you want to buy an option, you would likely end up paying the quoted "ask" price if you were to enter a market buy order. If you want to sell an option, you would likely end up getting the quoted "bid" price if you were to enter a market sell order. You can also enter your own price in a limit order.

The reason that the calls appear to be down is because due to lack of trading, the last price occurred yesterday or earlier at a lower stock price. For example, the Jan '21 145c is $45.30 x $47.40 with a last trade of $39.90 . It's a stale quote.

There are lots of issues with these LEAPS. They have low Open Interest, most haven't traded today, the few that have traded are in single digits, the IV is high and the B/A spreads are Holland Tunnel wide. That's a recipe for disaster unless you work the numbers.

The starting point is to determine the midpoint of the spread. For the above option, it would be $46.35. But just to be sure, put that price in a pricing model to make sure that the IV lines up with that of the other options and the average implied volatility for that expiration.

For a somewhat liquid option, the midpoint might be a reasonable price to get a fill, should a counter party show up. For LEAPs like these that trade by appointment, it's possible but not likely.

With B/A spreads like these, you really need to have courage of conviction to buy these LEAPs at the market price. If the call is ATM with approximately a delta of 50, the underlying will have to move up $2 for every $1 of spread that you pay in order to break even.