The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we are going to give you some general guidelines on acceptable options liquidity. Now, look. Acceptable liquidity is definitely vague and it’s vague for one big reason and that is the underlying strike price or the underlying stock price of whatever you’re trading. If you look at a stock like a Google or a Netflix or an Apple which has a significantly higher notional price or underlying price, naturally, you don't need to trade as many contracts to get value out of those underlying options. The liquidity will generally be… Total volume and dollar wise might be lower as far as number of contracts needed to be traded versus if you are to trade something really, really small like a USO or something like that, that has a very low underlying price. Again, it's very much a fluid thing. Not to pun on the word, liquidity too much, but it’s very much a fluid thing. And so, what I want to give you is some general guideli