Identifying Options with High Open Interest and Volume

A common request from options traders is the ability to filter and identify options based on liquidity metrics such as open interest and volume. These metrics are crucial for avoiding low-liquidity options that can lead to poor trade execution and increased slippage.

Why Open Interest and Volume Matter

Open interest and volume are key indicators of an option’s liquidity:

• Open Interest refers to the total number of outstanding options contracts that are currently active, providing insights into market participation.

• Volume measures the number of contracts traded within a certain period, giving traders a sense of how actively a particular option is being traded.

High open interest and volume generally signal strong liquidity, which ensures smoother execution of trades and better pricing. Conversely, low liquidity can result in wide bid-ask spreads, making it more difficult for traders to enter and exit positions efficiently.

Current Limitations in TradersPost

As discussed in a recent TradersPost office hours session, while the platform already provides some filtering capabilities, such as sorting options based on their distance from at-the-money, it currently lacks the ability to filter by open interest and volume . The reason for this limitation is primarily due to a lack of data access. However, as the platform continues to grow, there are plans to purchase more comprehensive options data to integrate these filters.

One alternative workaround for now is using spread width as an indirect filter for liquidity. While not as precise as volume and open interest, a wide spread often indicates lower liquidity, serving as a proxy measure until more detailed data can be incorporated into the platform .

Future Integrations and Possibilities

TradersPost is actively exploring partnerships with vendors to provide more robust options data, including open interest and volume. This data would allow users to create more advanced filters, significantly improving their ability to avoid illiquid options. Additionally, as TradingView expands its options data support for U.S. equities, users may soon have the ability to integrate these metrics into their analysis via TradingView’s platform .

Conclusion

The ability to filter options based on open interest and volume is a highly requested feature that TradersPost is exploring. While the feature is not currently available, there are plans to integrate it in the future, allowing traders to more effectively avoid low-liquidity options and make more informed decisions.