Hi guys, I've been reading about some great strategies using bull put spreads with growth stocks. Can I put on a bull put credit spread if the OI and volume for both the put sold and put bought are both 0? Is this recommended?
Somebody's gotta be first. But with such a lack of demand, you'd better be happy with staying until expiration.
IMO: Ignoring volume may be OK, but being the first for OI (OI of zero) should be avoided. Can you? -> Yes Should you? -> No
Why even try? There are endless issues with adequate liquidity. How is having no liquidity an advantage?
As long as the overall options chain has OK outstanding interest and some volume, it should be ok. A market maker will be happy to provide liquidity. Think of it this way - if you are first to trade this particular option but overall market is very liquid (eg an SPX weekly option that just got listed), you will get reasonably efficient pricing. If there is nothing happening in the name as a whole, you’re likely to get raped even if there is some open interest or recent volume in this particular option.
Thank you for the warning. I value professional opinions and advice, When event timeline is not exact and event outcome is not certain, (GILD, late Jan early Feb 2020) IV and bid/ask are usually quiet, then we retails may be able to play thin volume tails without paying too much. But yes I should be more careful.
How much money am l I leaving on the table by trading options with 0 volume and 0 OI? Is it really that bad?