Simply put, liquidity is all about how quickly a trader can buy
or sell something without causing a significant price movement. A liquid market
is one with ready, active buyers and sellers at all times.Here’s another, more mathematically elegant way to think about
it: Liquidity refers to the probability that the next trade will be executed at
a price equal to the last one.Stock markets are generally more liquid than their related
options markets for a simple reason: Stock traders are all trading just one
stock, but the option traders may have dozens of option contracts to choose
from. Stock traders will flock to just one form of DLF stock, for example, but
options traders for DLF have perhaps six different expirations and a plethora
of strike prices to choose from. More choices by definition means the options
market will probably not be as liquid as the stock market.Of course,
