Which instrument is most liquid/volatile/popular?

johanesw · Jan 4, 2009

Hi guys

Can you rank the instruments of stocks, futures, and options in terms of:

1. Liquidity (lowest bid ask spread, easiest to convert into cash)
2. Volatility (highest daily percentage change)
3. Volume (how easy it is to execute a single trade that's worth $100,000,000 of such instrument with fast execution...It should be easy if the instrument has high volume (such as forex))

Thanks!

Rhody Trader · Jan 5, 2009

Here's a very broad brush answer. There's very good liquidity in any of the higher profile futures and stocks, but for most option contracts it's the opposite. Options have the highest price volatility by a long, long way. Futures is where you can do the biggest value trades the easiest.

That said, there are massive difference between futures contracts and in and among the different stocks. That makes your query hard to answer very specifically.

By the way, forex beats all the others in liquidity and volume.

N Rothschild · Jan 5, 2009

id say on certain days futures like gold and crude can be pritty vicious!

WallStreetHero · Jan 5, 2009

ill prefer forex because of the volitility and spreads

Rhody Trader · Jan 5, 2009

suhaib said:
ill prefer forex because of the volitility and spreads

Forex volatility is actually, in general terms, less than other markets. For example, how often do you see 10% moves in one of the majors on a single day? Extremely rarely. Now how often do you see them in stocks? I won't say frequently, but certainly it's much more common than in forex.

Leverage, of course, can make all the difference.

Skill Leverage · Jan 5, 2009

Rhody Trader said:
Leverage, of course, can make all the difference.

You're too kind Rhody, I know I'm influential in the markets but even I have limitations

darckeen · Jan 8, 2009

For that kind of size the most liquid market is spot currency for sure, if your limiting yourself to futures, stocks or options then futures are the most liquid of those asset classes, especially the highly active contracts such as eurodollar, bond, and S&Ps. As others have alluded to though, the actuall dollar value of a position is meaningless without accounting for leverage and underlying asset volatility.

Skill Leverage · Jan 8, 2009

I see my joke went down like a sh*t sandwich... best not put that one in the book

rathcoole_exile · Jan 8, 2009

what's a shut sandwich, is that the opposite of an open sandwich ?

you see, you don't have the monopoly on rubbish jokes !!

Skill Leverage · Jan 8, 2009

Top drawer Sir.

Which instrument is most liquid/volatile/popular?

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