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What does liquidity mean?What does liquidity mean?A measure of how quickly a stock or option can be sold at a fair price. The daily volume and the open interest, are two good ways to measure option liquidity. The daily volume of an option contract is the measure of the number of times that contract was traded on a certain day. The higher the daily volume, the more liquid the option contract is, when compared to options with a low daily volume. Another way to measure option liquidity is the open interest of the option. The open interest is the number of outstanding options which currently have not been closed out or exercised. The higher the open interest, the more liquid the option contract is said to be.
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