{"product_id":"stcov313exyo","title":"Stocks \u0026 Commodities V. 31:7 (33): Explore Your Options by Tom Gentile","description":"Explore Your Options by Tom Gentile\u003cbr\u003e\u003cbr\u003eGETTING ENOUGH LIQUIDITY?\u003cbr\u003e\u003cbr\u003eOn top of the list of things that option\ntraders look at to measure liquidity is\nthe bid\/ask spread on the option they\nare interested in buying or selling. The\nthinner the spread between these two\npoints, the more efficient the ability to\nbuy and sell in a shorter time period, and\nthe more likely you are to make a profit\nover time. I look at the bid\/ask spread\nthe way a professional gambler looks at\nthe edge in a casino game. Casino games\nand option trading are not that far off;\nas traders, we know there are certainties\nwe cant overcome. The spread between\nwhat we can buy something for and what\nwe can sell it for is one of them. Heres\nhow to make sure youre trading at the\nclosest price to the middle.\u003cbr\u003e\u003cbr\u003e1) Look at the stock universe. There are\ntens of thousands of issues that trade each\nday, but only about 4,000 of the listed\nsecurities trade options. Which of these\nhave the most liquidity? You may think\nthe stocks that represent the S\u0026amp;P 500\nbasket have higher liquidity than those\nthat do not. Going deeper, perhaps the\nOEX 100 or the Nas daq 100 will give\nus even more traded issues, hence more\nliquidity. Thats a great place to start,\nbut on an individual stock basis, its not\ngoing to tell you which options have the\nthinnest spreads. My suggestion is to\nlook at the PPP.\u003cbr\u003e\u003cbr\u003eWhat is the PPP? PPP stands for\npenny pilot program, which was\nput in place by the CBOE (Chicago\nBoard Options Exchange) a few\nyears back. Prior to the start of the\nPPP, options would trade no less\nthan the five-cent spread (bid .95\/offer\n1.00). This program started with\njust a few stocks that started trading\noptions in the pennies. Now there\nare more than 300 stocks on the penny\nlist. This list can be found at https:\/\/www.\ncboe.org\/hybrid\/pennypilot.aspx.\u003cbr\u003e\u003cbr\u003e2) Look at the strike universe. Option\nstrikes are plentiful, but which ones offer\nthe best liquidity? Lets take a look\nat each type of option:","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52134054166897,"sku":"V31C07_580GENT","price":2.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_acf6f75f-5eac-4bec-992a-0989065b4f68.jpg?v=1739664140","url":"https:\/\/shop.traders.com\/products\/stcov313exyo","provider":"Stocks \u0026 Commodities","version":"1.0","type":"link"}