As long as theirs a bid and ask for it you can buy it or sell it. ( meaning someone’s willing to make the trade) Options are contracts, volume is how many contracts changed hands, and open interest is how many contracts are out there. Just be weary with 0 volume and 0 open interest as if you buy it, it’s going to be hard to sell because no one is interested in that contract. It will most likely have a very wide bid/ask.
wait you said i can still buy and sell it if its 0 and then you said it going to be hard to sell because no ones interested. if no ones interested how can i sell it? do i need high volume and open interests?
Options are created whenever a buyer and seller trade while both opening a new position. Options change hands whenever a buyer and seller trade a pre-existing option. Options are destroyed whenever a buyer and seller trade while both closing a new position.
As a general rule, it's higher risk to trade in any "thinly traded" market. With an "open interest" of "0", that's the worst. I'm not an options expert of any sort, but some say you don't want to mess with any option that has less that 100 contracts open interest. (Even that seems too low and "high liquidity risk" to me.)
You are trading4fastprofits and you asked this question? Sorry I am saying this in jest. Welcome to ET and hope you hang around like me, another newbie, and learn to trade from expert coaching by the pros here.
Large OI options are highly efficient and often neither buyer nor seller has an advantage. If you are small mom and pop retails like me, you don't want to trade with some professional who has high conviction taking the other side because that means you are likely on the wrong side. Thinly traded may offer better odds if you don't get kill by bid/ask. Therefore you pick your poison if you are retail.