I am new to options and am dutifully eating my humble pie, aka getting my paper buns kicked. Nonetheless, I'd like to get my human buns kicked too. So: I'm trying to buy puts on Google, and I have a few questions. 1) Should I buy GOOG or GOOGL? What's the difference? 2) Why is there VERY little open interest on both puts and calls? Is that an indicator of something? 3) Hints on the calendar? Next Friday is 3rd Friday - is that a problem? Cheers!
The only difference between GOOG and GOOGL is that GOOGL (class A) shares provide voting power. Both GOOG and GOOGL shares are likely to perform the same over time with regards to stock price. If Alphabet ends up paying a dividend, then both types of stock will pay out the same dollar amount. I’d prefer GOOG since I wouldn’t vote anyway and rights aren’t free. Open interest depends on the specific contracts. Price ... Expiration ... Little compared to what ? Volume matters more than open interest as you want your underlying to be liquid. That’s all I can tell. Not an option trader.
OP, what strike price & what expiry are you looking at? hint, on the OTM puts- low open interest/low volume you'd want to believe the stock is bullish
Let's say April 24 1230's The thing is there isn't much volume on GOOG calls either so I'm confused...
Open interest tends to be a better indicator of liquidity than volume. If you have heavy OI you can get out of a trade with an offsetting trade because there are trades on the books ready to go. Volume is not necessarily indicative of overall liquidity - though you can and should use both with a heavy dose of experience. I tend to use volume to find options that are a tick wide or so, and OI to judge the actual "liquid potential" of the contract.
on the 24 April puts, low volume indeed me thinks $1230 is too close,go deeper OTM for a few dollars less,lower the risk. consider $1200,$1207,$1220 or consider $1200 May 1 expiry https://www.barchart.com/stocks/quotes/GOOG/options?expiration=2020-04-24&moneyness=allRows
Thought open interest as share holders. If OI > Volume then, Selling potential > Buying potential Since OI is only positive, holders, I believe. Liquidity is scarce since trades, volume, isn’t easy (facilitated) but the underlying is crowded. Like a sold out theater with only one tiny door. Volume is still a better proxy ... I believe, for liquidity. Such as: Volume / ((High-Low)/Tick size)