Can you trade options in small and micro cap stocks?

Discussion in 'Options' started by youngtrader, Oct 22, 2007.

  1. Was just wondering if you could do this. I imagine you could but am not for sure. Seems like a nice stratagy to just sell options on most of those type of stocks.
  2. sure, as long as the stock has options on them.
  3. tvgram


    There are about 3,050 stocks and ETFs that currently trade options, and many of them are smaller cap stocks (not really micro cap for the most part).

    One thing you have to worry about is liquidity. Only about half of those trade over $40,000 in options per day, on average. I usually screen out any that are below that level, since they are thinly traded and the bid/asked spreads tend to be larger (not to mention they can be more difficult to get out of if something goes wrong).

    But the thing I really wanted to ask is why you would think it would be better to sell options on small or micro cap stocks rather than larger companies. What is your rationale behind that line of thinking?