Liquidity
How easily you can buy or sell something without moving its price.
Liquid markets have many buyers and sellers, tight bid-ask spreads, and lots of volume, so you get in and out at fair prices. Illiquid stocks and options have wide spreads and thin volume, so trading them quietly costs you money. For options especially, liquidity matters as much as the premium.
For example
A big-cap stock trades millions of shares a day with a penny spread. A micro-cap may trade a few thousand with a wide spread that eats your profit.
Related terms
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