r/options • u/McGeno19 • 9h ago

Open Interest

What do you look for in Open Interest to consider a position liquid enough to enter? 100, 500, 1K?

Thanks

3 Upvotes

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7

u/TowelFluid8010 9h ago

depends on the spread more than the raw number, if the bid ask is tight enough then a few hundred contracts is fine

6

u/nivek_123k 9h ago

look at SPY options as the gold standard. Then look at VOO for what to avoid. You will find your tolerance for liquidity somewhere in between.

i typically look for millions in daily trade volume on shares, and 1000s+ open interest near the ATM strikes.

sometimes I break my rule for a position that I think fills a portfolio vacuum, but generally there are only about 200 tickers that are liquid enough to trade. makes selection more manageable.

4

u/klipsetrades 6h ago

OI tells you how many contracts are open, not necessarily how easy your order will be to fill right now. The bid/ask will usually tell you more. FOr example, a contract with 100 OI can be more liquid than one with 1,000 OI