I have a lot of gripes about low-volume options markets like we’re in now... It can be especially maddening when institutional buyers aren't participating while the rest of us are still trading.
Low trading volume can wreak havoc on liquidity, making the difference between buyers and sellers — known as the “bid-ask” spread — wider than a truck.
For the uninitiated, liquidity is the combination of daily volume and open interest. The higher each of those categories are, the faster a stock or option can be bought or sold without impacting the price.
There are a few more big reasons why options liquidity — sometimes called "order flow" — is important, especially for retail traders.
Disclaimer: The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein.
Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.
Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, be equal to any corresponding indicated historical performance levels or be suitable for your portfolio. Any investment results set forth in this document are not net of expenses and execution costs, nor do they account for other relevant trading or investment fees. Please visit wealthpress.com/terms for our full Terms and Conditions.
0 Response to "How Liquidity Can Make or Break Your Options Trades"
Post a Comment