Option Volume

[Cyrust2327 10]

Hello everyone, I would like to know if volume is important to options. Say i want to sell 100 XYZ at 169, but there is only a volume of 10. What would happen? What if I want to buy 100 and there is only 10 volume. I have looked all over for a answer to this question but have not found an answer.

[SIUYA 11]

it depends on what volume you are looking at.

For options there are usually market making quotes that show in the screen 'indicative prices' and quantities.

 

eg; 10 qty bit at 168. 10 offered at 172.

 

Now you can choose to buy/sell at any price you like and try and get a better price. Also dont forget that most of these quantities and prices quoted will change with the underlying changing, and other option series trading.

 

eg; you might want to sell 100 at 169....

 

You might then offer 50 at 169 - if they immediately sell then it tells you there might be some demand there.....then you might try and offer more at 169, or maybe some at 170 to test the demand. or just sell the balance at 168.....

 

What you see on the screen is largely 'indicative' - that is the key to remember with most options.

 

Often the daily volume at a series will show you what is trading at present, and even if there is no volume traded in a series today it does not mean there is no interest in people trading that series.

..............

this is an entirely different matter to option open interest (volume) - which shows the number of outstanding options contracts open...

 

This will largely show you what has traded in the past.

 

Options Trading Volume And Open Interest

............

[Cyrust2327 10]

Double post---------------

Edited October 6, 2013 by Cyrust2327
Double post pls delete

[Cyrust2327 10]

I would also like to know why some of my orders dont get filled. They were sell options with about a quantity of 400.why didnt they get filled? It was on GTC too.

[SIUYA 11]

orders not being filled ....

possible reasons...

1...your broker f.d up

2...your price was too high

3...did you get some filled and then not the balance?

 

need more information.

 

But basically....you may have wanted to sell 400 at a price but no one wanted to buy at that price.

If you had a GTC order but it was at a limit - then its irrelevant. You might have required at sell at market - down to a price limit.

 

Remember those quotes are indicative....

[Cyrust2327 10]

But basically....you may have wanted to sell 400 at a price but no one wanted to buy at that price.

 

So someone has to buy the options when I sell them? What if I lower the price and still no one wants to buy it?

[Cyrust2327 10]

So there has to be 400 buyers for me to sell the 400, right?

[SIUYA 11]

So someone has to buy the options when I sell them? What if I lower the price and still no one wants to buy it?

 

if you really are asking this question you should not be trading - especially options.

 

this is fundamental supply and demand and liquidity. Understanding how options pricing works and moves is important as well

(The main difference in most instruments v options is the liquidity factor. Most instruments have many many various traders, whereas most instruments might have only a few market makers....hence potentially less liquidity.)

 

So there has to be 400 buyers for me to sell the 400, right?

 

if you really are asking this question you should not be trading - especially options.

 

......................

no - you might have 1 buyer who wants to buy 10,000 options and you are just supplying them some. Or

you might have buyers who dont really want to buy but will set a low price at which they will transact Or

there might be any where between (0 and world population) buyers at different prices.

 

dont confuse quantity v number of traders v number of trades.

[Cyrust2327 10]

Alright I understand everything now, but what is the difference between open interest and volume?