I was curious to know if some folks use a general number for judging whether or not an option is liquid enough to trade (day or swing). I'm using them as a hedge, so I only want anywhere from 1 to 20 contracts. My rule of thumb for trading the cash is at least 250,000 shares traded per day. What's the best way to translate this into options? Is actual option volume or open interest the more accurate figure? So far, I haven't had any liquidity problems, but I'm looking at some thinner issues that may have less than 1000 contracts in volume per day and about 1000 open interest on ATM options.
Volume on options is not nearly as important as where they are priced. How dear is the spread is the most important...