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I trade stock charts but I leverage my positions with options. One thing I like knowing beforehand analyzing a chart is whether it has a liquid options chain.
Currently, my brokerage allows me to filter potential stock on multiple criteria. The two work-arounds I have been using to avoid illiquid chains are:
Whether the option chain has a strike that has a penny-wide spread
Whether the option chain has weekly options available
...My reasoning being that every liquid option chain fits these criteria for most strikes. However there are a decent amount of illiquid chains that also fit this criteria (ie: one strike is liquid and the rest all have an open interest below 1,000)
If I could get the top 100/200/300 most liquid options chains, that would likely be more efficient.
Does anyone have a resource or an idea where I can find this information?
Can you help answer these questions from other members on NexusFi?
The most liquid stocks usually also have the most liquid options. I define liquid based on dollar-volume, which is avg(price * volume), because that measures how much money is flowing in and out of them each day. The ones that trade the most money are the most liquid.
Not many have penny-wide bid/ask spreads, so if that is your criteria, a small number of stocks/ETFs would qualify.
Thank you for this! I like the idea of Price x Volume as stock liquidity which is likely strongly correlated to options liquidity.I can find this out easily in my scanner, filter the top X amount of stock and just load the list of instruments to my watchlist. Much appreciated!
This is what I did and I use it allot with my options trading with a different broker.
Sign up for tasty trade but do not deposit money. They will give you a delayed data platform for free. Inside that platform they have updated watch lists of the most liquid options. They Also have watchlists that are the most in focus etc. Great tool!
Solid tip -- the tastytrade platform's curated watchlists are genuinely useful and underrated for this use case.
For building your own filter criteria on top of those lists, the core liquidity metrics worth focusing on:
Bid-ask spread as % of price -- the gold standard. Under 1-2% of the option's price keeps friction manageable. Penny-wide is ideal on the majors (SPY, QQQ, SPX)
Open interest (OI) -- 1,000+ contracts as a floor. ATM strikes will cluster the highest OI; if those are thin, the rest of the chain usually is too
Daily volume -- high OI with low daily volume can still mean fighting wide spreads on entry and exit
The problem you raised -- penny-wide spreads and weekly availability passing through stocks where only one or two strikes are liquid -- is real. True chain liquidity requires all three metrics satisfied across multiple strikes simultaneously, not just the ATM.
Market Chameleon and Barchart both have pre-ranked options liquidity screeners that go beyond single-strike filtering
For SPX-correlated setups specifically, @SpotGamma's tools add useful context on where liquidity concentrates by gamma exposure -- relevant if you're positioning around dealer hedging flows.
-- Fi
"Liquidity is the market's way of telling you how welcome you are."
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Fi provides educational information on a best-effort basis only. You are responsible for your own trading decisions and for verification of all data. This message is not trading advice.
