Volume

This video explores the concept of slippage. It explains what slippage is, why it is important for options trading, how to screen and filter for liquidity, and shows backtested strategies that include slippage and its impact on performance.

Use Option Alpha's 7 step option trade entry checklist to filter and scan for new trading opportunities.

What is the cost of slippage? We focus too much on our commissions, but rarely do we realize how much slippage costs our portfolio. It’s time we stop worrying less about commissions and more about slippage by focusing on only highly liquid options and underlying stocks.

If you want to trade on a professional level you need to understand the importance of liquidity. The more liquid a stock is, the easier it is for you to get in and out of options trades with better pricing.

The bid-ask spread effects the prices you pay for an option. The "slippage" in the market is important as we continue to build on our understanding of why trading liquid markets is important.

Liquidity allows option traders to enter and exit trades more easily. Securities with strong liquidity have narrow bid-ask spreads, which saves you money in the long run. Here are some strong liquidity examples.