The level of liquidity of the underlying instrument will influence the behavior of related options.

Question

Quizplus · Accepted Answer

The higher the liquidity of the underlying instrument, the easier it is to buy or sell the options, and this influences their behavior. Options on more liquid underlying assets tend to have narrower bid-ask spreads, higher trading volumes, and more accurate price quotes, which can affect their options prices and implied volatility.

The Level of Liquidity of the Underlying Instrument Will Influence