Liquidity: The Ultimate Game Changer in Options Trading

Before you trade an option, check the open interest. Tom Preston calls liquidity the most underrated factor in product selection and he learned the hard way by getting stuck in a Goldman Sachs options position he could not exit without giving up too much edge. SPY and SPX have thousands of contracts of open interest and bid-ask spreads as tight as a nickel on a $7,200 product. That is unprecedented and it is the result of zero DTE trading tightening the markets. Goldman Sachs has bid-ask spreads $2.70 wide. NDX has barely any open interest despite tracking the exact same index as QQQ. The lesson: always use QQQ over NDX for NASDAQ exposure and never enter an illiquid product without knowing you will pay slippage going in and coming out. 📊 tastylive: https://www.tastylive.com/ 📰 Get Tom's pre-market analysis every morning: https://www.tastylive.com/newsletters 📘 FREE Options Strategy Guide: https://tinyurl.com/bp9ms763 📱 Follow tastylive on X: https://x.com/tastyliveshow Chapters 0:00 Liquidity: the most important factor nobody talks about 1:00 Open interest explained: what the number actually means 2:30 SPY: the granddaddy of liquidity live walkthrough 4:00 SPX: nickel wide on a $7,200 product 5:00 Goldman Sachs: $2.70 wide and barely any open interest 6:00 Tom got stuck in Goldman Sachs once. Here is why 7:00 QQQ vs NDX: same index completely different liquidity 8:30 The four star liquidity indicator in tastytrade 9:00 Always check open interest before you trade anything #OptionsLiquidity #OpenInterest #OptionsTrading #TomPreston #tastylive #CherryBomb #SPY #OptionsEducation tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we'll help you take your trading to the next level, whether you are new to trading or a seasoned veteran. tastylive content is created, produced, and provided solely by tastylive, Inc. ("tastylive") and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange Traded Options Risk Disclosure Statement found at https://tastytrade.com/disclosures/. Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims, including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.