Option traders! Have you ever failed to find buyers/sellers for squaring off your position?

[newtrader101]

Unlike stocks, in options volume can be low. So did you find yourself in such a situation where there were no buyers or sellers? What did you do then? Thanks for answering.

 

[Contra]

Unlike stocks, in options volume can be low. So did you find yourself in such a situation where there were no buyers or sellers? What did you do then? Thanks for answering.

Yes, this has happened to me in the recent past. I remember sitting on a profit of 15k on an options trade in Adani Ports. By the time I was able to exit (due to insufficient liquidity), that profit was down to 7.5k. Given the fact that brokers allow only limit orders in options, you've got to place your exit at the nearest bid which can be some ways away from where you'd ideally want to exit, costing you both delay & money. This is definitely an issue if you're in profit (you don't get to exit quickly) but a major problem if in loss & trading big lot sizes. Since then, I've moved away from stock option trading till I see better liquidity.

 

[newtrader101]

Yes, this has happened to me in the recent past. I remember sitting on a profit of 15k on an options trade in Adani Ports. By the time I was able to exit (due to insufficient liquidity), that profit was down to 7.5k. Given the fact that brokers allow only limit orders in options, you've got to place your exit at the nearest bid which can be some ways away from where you'd ideally want to exit, costing you both delay & money. This is definitely an issue if you're in profit (you don't get to exit quickly) but a major problem if in loss & trading big lot sizes. Since then, I've moved away from stock option trading till I see better liquidity.

I guess even advance limit orders are of no help, Contra.

 

[thimma]

This has happened to me many times. Lesson learnt was to trade only in liquid stock options like Reliance, Tatamotors, ICICI, Infosys, etc...