The only time we can truly control something in a trade is at. The two things we can control are our and our loss potential.
The first consideration should be. The more liquidity a stock has, the less your costs will be. Higher amounts of liquidity also makes entering and exiting positions easier.
The primary liquidity metrics are open interest, volume, and the bid/ask spread. Theplatform ranks stocks by our proprietary liquidity indicator which factors in open interest, volume, and the bid/ask spread of options.
and should be the next step. Since we are usually , we prefer high IV.
The underlying's price is the next consideration. High priced stocks will generally have less liquidity in the options, and therefore wider bid/ask spreads. Also, the margin for undefined risk positions will be higher.
Strategy selection is the final step. A table of different option strategies was displayed. The table included the strategy, the preferred IVR, directional bias, probability of profit and buying power reduction.
Watch this segment of “Best Practices” with Tom Sosnoff and Tony Battista for the valuable takeaways and other important information regarding order entry.