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I’ve been buying and selling Nifty/Financial institution Nifty and in addition some occasions inventory choices. The indices are principally liquid, however ATM Calls and Places and even 1 strike above or beneath ATM on massive shares even like Trent appear to have a variety of over 4 – 5 Rs at occasions.
I determine that generally there may be liquidity in these shares and generally there isn’t. My query is
What sort of sanity checks ought to somebody have whereas buying and selling choices and how much bid-ask spreads do you guys contemplate if you’re possibility consumers. For ex in shares, say the unfold is greater than 3 Rs – do you keep away from? Any guidelines or heuristics round this might assist me suppose this via higher
Generally in a matter of minutes if a breakout occurs beforehand illiquid choices turn into liquid – so I’m additionally not prepared to utterly ignore sure strike costs – curious the way you people handle this
Any sensible recommendation will likely be appreciated! Thanks
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