a potential profit for a successful trading system is dependent on the liquidity of the market. for stock iwm, the bid and ask size most times are only a few thousand shares, while its option is much thicker, in a range of hundreds of thousands shares. for example, spy has 10 thousands contracts on the bid. so Medallion fund makes more money from option than from stock itself?
bid and ask size on option is so huge
- Thread starter trend2009
- Start date
Robert Morse
Sponsor
IWM volume today was 19 million shares. The ETF manager has nothing to do with the options.
option bid/ask size is thicker than iwm stock, but option trading volume is much thinner. why do not institutions trade option as much as stock? is that because option is more expensive to trade?
Robert Morse
Sponsor
Options are a derivative of the stock/etf. Each option requires hedging. It would be very rare for the option to be more liquid than the stock/etf it is based on. Would you offer that size if it could not be hedged?
Robert Morse
Sponsor
These are the closing markets in IWM options at end of day, They look liquid to me.
it is very liquid, more than stock itself. the question is why the trading volume is not as much as the stock.
Robert Morse
Sponsor
The stock is more liquid, as I pointed out, +20mm shares in one day. I added OI. Look at the monthly options Open Interest. The small-cap index does not get the same interest as the large-cap ones like SPY and QQQ.
