You mean volume? Volume and liquidity are not the same thing. The reason a MM sells/buys an option is because they can hedge it in a more liquid market. Almost by definition, ES _must_be_ at least as liquid as SPX options. It is very possible to have far greater volume in SPX than in ES. Think in terms of delta. I do two delta 50 SPX options, that means I have to hedge it with 1 ES. There are many strikes and months in SPX, all of which have at most 100 delta and many that have far less delta. Then you have greeks that can only be hedged with other options. The rest follows from simple logic. nitro PS. Also, although less likely, you can hedge SPX with SPY or even with the SP futures (or even YM NQ etc if you realy want to get technical), taking some of the [hedge] volume away from ES.
Nitro is right. There are a million guys doing the SPX/ES arb. There are more then enough willing participants ready to take the other side of your order to lay off against the other. The only deeper options liquidity in the world on an exchange traded product would the the Euro-dollar options. SPX/ES options are very very very deep.
You are in for a big surprise. Fills go to the one willing to do large size at the best price, and you have to be in the pit to do it. And that is just the beginning of the hardship... nitro
Imo, for the retail trader, I have no idea why you would ever use SPX options. For the institutional trader SPX is unmatched because of the massive size you can do close to mid. But for the retail trader, I just don't understand why you would ever choose SPX over ES options, since ES options are electronic. Only if you were trying to play mini-market maker would you do SPX, because of the [perceived] wide spreads means that a skillful trader can sucker in less skillful retail traders to trade at a bad price in SPX. If your goal is not to play mini MM, then imo ES options are a better trading vehicle than SPX options for the reasons given above. When SPX options goes 100% hybrid, the terrain may change... nitro
You get better fills with a floor broker. I really don't think one product is better then the other. I have stated before one of the nice things about the cash index options is most retail platforms have better analytics for cash options vs futures options.
Still no volume in ES, but now you love them: http://www.elitetrader.com/vb/showthread.php?s=&postid=590896&highlight=nitro+es+options#post590896
The volume in ES options is growing slowly, but it is growing. They don't even come close to SPX volume. But, that SPX volume is a mirage because it is all institutional and the fills go to the MM in the pit. It is an illusion if you think that any of that volume goes to the retail trader doing less than 50 lots. nitro