Which variable is important to look at for call/put options?

C

cashclay

I see on the list there IV, volume, deltas, open int, vol/oi . Many traders have told to always check the IV and volume and open int to determine if there is alot of active traders trading the options.
I am wondering if you guys agree with this statement as well?
 
The question is kind of vague but you basically just asked "should I check on the most fundamental components of options to determine liquidity before trading them"...yes lol

you can determine the liquidity via OI and Volume. Also bid/ask spread is a good indicator same as with equities.

IV has to do more with pricing (high IV = expensive options, low IV = cheap options) than liquidity but I am sure there is a relationship there as well...If IV increases I would think liquidity would as well simply because transactions are taking place to cause the rapid movement.
 
turkeyneck said:
Too many variables in your question. Are you long or short and what strategy?
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well actually im not a trader of options, although i would like to learn one day . Im trying to use the options market as a gauge for stocks to daytrade in .

If my question were to pick a side it would be call options.
 
cashclay said:
I see on the list there IV, volume, deltas, open int, vol/oi . Many traders have told to always check the IV and volume and open int to determine if there is alot of active traders trading the options.
I am wondering if you guys agree with this statement as well?
More...

Delta and IV have nothing to do with liquidity.

Just look at open interest and volume. And look at bud ask spread. Compare with other liquid instruments - similar if possible.

Hth!
-gariki
 
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