Whenthere are four things that we consider:
- Liquidity is important because if we can't get filled, we can't paid.
- Liquid: Bid-ask spread between .$0.01-$0.05
- Semi-liquid: Bid-ask spread between $0.06-$0.50
- Illiquid: Bid-ask spread> $0.50
- We use to measure if IV is high or low
- IV helps to determine strategy
- BPR is effected by price, BPR also has influence on strategy chosen
- We can use price to determine if we want to make a directional trade
- We can choose our strategy based on many things, some include:
- IV level
- Directional bias
Tune in as Tom and Tony discuss this checklist in depth!