Questions tagged [liquidity]

Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.

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Consequences of liquidity crisis to passive ETFs to a buy-and-hold investor

Various sources raise the risk faced by passive investing ETFs, such as index funds, in the event of a liquidity crisis. One such example is the Investopedia article Why Passive ETFs Face Big Risks in ...
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How big participants consume liquidity

I’m currently studying order flow, and one thing I see a lot is that big participants or institutional traders don’t use market orders in order not to get slippage, instead they use limit orders ...
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Who's on the other side of very illiquid option contract trades?

So I've been short selling Deep-in-the-Money, far from expiration Put Options on an ETF for about a year now, to profit from upward price movements on the underlying and time premium decay. Volume for ...
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If I have two assets that both have the same returns, but one is liquid and the other is not, how do I calculate the difference in value between them?

Let's say I have $20,000 in a stock that reliably returns 5% every year ($1,000). I also have an intangible asset that passively earns me $1,000 every year, as reliably as that other stock. Maybe it'...
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What is "trading for liquidity reasons"?

In this paper, it says: For example, routine sells by insiders are commonplace in the market, and can be driven by diversification or liquidity reasons ... What exactly does “trading for liquidity ...
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How do I make shares post-IPO liquid?

I have an option grant I exercised at a pre-IPO company through Carta.com, which shows I have X shares in the company of Common Stock. The company IPO'd. I didn't sign a lock-up agreement although was ...
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-2 votes
3 answers
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What would happen to the price of a high-demand, no-supply asset once liquidity reaches 0?

If there was an asset with a fixed supply and ever increasing demand, what would happen to its price once all holders of said asset refused to sell? Obviously this is practically impossible, but just ...
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Liquidity of ETFs and Authorized Participants

I will buy the Vanguard Ftse All-World Units Etf A through my bank on Borsa di Milano (the Italian Stock Exchange). I have been told by the financial advisor of my bank that these assets have a small ...
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Best place to keep savings for home down payment?

I'm currently saving for a first home down payment (in USA), but don't want to keep a large pile of money sitting in a low-yield savings account while I'm looking for the right home. I want to find a ...
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What is "negative liquid assets" called?

I technically have $3000 on my bank account. However, I have -$2000 in "liquid assets", as determined by my little software system which I've made. Basically, it takes the money I have and ...
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Question for Xenith (Eikon) Expert - Is the following data available...?

In the ''Universe'' tab are many different options: Government and Corporate Bonds, Equities, Funds, Indices, Equity & Index Derivatives, Companies/Issuers, Commodities, FX & Money, Benchmarks ...
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Why is capitalization because of revenue fall important?

I have a question: Why is extra capital important in case of revenue drop, either quarter or annual revenue? I'm asking: what are the benefits of getting large amounts of extra capital if revenue drop ...
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What is the difference between payment for order flow and ECN rebates?

In both payment for order flow and ECN rebates, one gets paid for providing liquidity. What is the difference between payment for order flow and ECN rebates? Are ECN rebates a type of payment for ...
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Calculate liquid net worth

I look at the definition and I understand the idea and concept of liquidity: It's how much cash you can pay and cover more or less immediately. I have x dollars in stocks and savings which can be ...
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Calculating volatility percentage for a given time period

I am looking at an EMEA liquidity report. One measure I am interested in is the volatility. The report includes a list of various indexes and the "Average Volatility " for a period of 5 days ...
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2 votes
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Consequences with liquidity issues for an index fund or ETF?

In the media in recent months, there were mentions of liquidity risk of index funds and ETFs (sparked by some statements by Michael Burry). My question is if there is a mass sell off by the public of ...
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How might ETFs accelerate a "crash" [closed]

I am editing my question to pose the inquiries first in order to hopefully emphasize their objective, rather than subjective nature upfront. Here is my question: Am I correctly understanding the ...
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18 votes
1 answer
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What is the relationship between taxes and annual liquidation of the markets? [closed]

I read this article on MarketWatch where they outline Elizabeth Warren's plan to tax the wealthy: 2% tax on every dollar above $50 million in assets 6% tax on households crossing the $1 billion ...
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2 votes
2 answers
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What to do with tax-free 50k? [duplicate]

Say I'm a federal employee and as far as retirement and healthcare, everything is smooth sailing, I'm well on track to retire comfortably with a pension in lets say 2045. Also consider zero debt, no ...
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Are treasury bonds more liquid than USD? [closed]

Does it make sense to say that, in a way, US Treasury bonds are more liquid than USD? I think this because the value of all the bonds in circulation is way greater than all the dollars in circulation, ...
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What is "the liquidity illusion"

I came across this visual, but it's a bit complicated, I haven't been able to make sense of it. In so many words, the way I read it is: if defaults pile up, the market is spooked, spreads increase ...
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How can I tell if an ETF is sufficiently liquid?

How can I tell if an ETF is sufficiently liquid? How much should it have in assets? How much should the minimum average daily volume be?
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Daily spread measure for products in crypto exchanges?

I'm now trying to trade in crypto, and I want to get a measure of the liquidity of products listed in exchange. Trading volume is a good measure, and easy to obtain. Spread is also a good measure, ...
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Why certain ETFs are popular( liquid) but Options on very same ETF are not

For example on comparing EEM/VWO , SPY/IVV/VOO etc and I always wonder why some ETFs are popular but options are not. I see a question How to pick ETFs that hedge against stock market crashes? that ...
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Too much cash: pay off mortgage, invest in market, or all of the above?

My wife and I have the (pleasant) problem of having too much cash. Part of the reason is that we have been looking to upgrade to a nicer house for the last few years, but we never found the right ...
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1 vote
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Time taken to cash out Stock Investments inside Chase internet banking

I invested some money (10k) in the stock market. Chase had introduced a new free feature called INVESTMENTS by JP Morgan . I like the fact that internet banking was showing my stock value right next ...
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What were the actual problems of selling your long-term stock holdings during 2007-09?

I would like to know what were the differences of trading US equities during the credit crunch era from someone who had a pertinent experience, since I was a high school kid back then and now I'm an ...
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What are the auctions redirecting some retail option orders that the WSJ is referring to and why is it disadvantageous to market makers?

In this article talking about market makers within the options market: Options on key indexes, exchange-traded funds and high-volume stocks dominate trading. Meanwhile, there is less activity in ...
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How to read volume in stock market?

I think I'm a bit confused about the volume in stock markets. For example: in tradingview I can see for AMZN the volume in 2 minutes candles is in average 1K-2K, what does it mean? I thought it was ...
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Is high liquidity required to fulfill DRIPs?

With DRIPs you get equity instead of cash, but where is this equity coming from? If it's from the existing market then what happens in low liquidity situations?
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What is a good measure of liquidity for a stock?

Some stocks are traded a lot and the price graph looks continuous. Others just jump all the time. Which metric could I use to filter the stocks that are not continuous? I don't think volume helps ...
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Why would a CD Rate be higher than a Corporate Bond rate?

In looking at my brokerage account for fixed income products, I was looking at both CDs and Corporate Bonds. I was surprised to see that the best 1-year CDs had a higher interest rate than any AAA or ...
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2 votes
2 answers
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Can you sell your REIT stock at any time?

I have only ever bought 3 stocks before, but I am really intrigued by this whole new world. I am thinking about buying some shares of Government Properties Income Trust (GOV), a publicly-traded (on ...
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25 votes
5 answers
9k views

How much money should I lock up in my savings account?

I'm a 28 software engineer. I make around 26k, of which about 40% I set aside every month. In my two-and-a-half years working I now have about 24k savings. I've recently opened an account that allows ...
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The most appropriate ways to keep money ready for emergencies?

Background info: My financial planner advised investing money in debt funds, mutual funds as long term investments, where in case of an emergency for large amounts, I could withdraw from the debt ...
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What are the gains from more liquidity in ETF for small investors?

One of the often cited advantages of ETFs is that they have a higher liquidity and that they can be traded at any time during the trading hours. On the other hand they are often proposed as a simple ...
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How liquid is options market?

My strategy involves making profits from an increase in implied volatility on long straddles/strangles. Enemy: Time decay I am aware that the time decay accelerates. I read that for a 9 month ...
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How does liquidity affect currency price while trading [closed]

I would like to know what happens to the market when the following situation arises on the GBP/USD currency pair: -Say some big investor sells 100 million pounds but current liquidity in the market ...
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Where is the liquidity on European derivatives exchanges

This has bugged me for a long time, and I feel like I am missing some information. When I browse Eurex, a derivatives exchange in Europe, I don't see the kinds of liquidity I would expect. For ...
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Liquidity Balance Sheet

Should be or should we not deduct long term debt along with current liabilities from total current assets to arrive at current asset value per share?
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Loan against fixed deposit

I have a few FD's locked in for a period of 2 years. However, I am not very liquid at this point and I need access to that money immediately. What are my options? Can I take a loan against my Fixed ...
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American trade Hong Kong financial markets (specifically index options)

How can an American get access to the Hang Seng index and index options? This trades in Hong Kong, but really exposure to Hang Seng stocks and derivatives (and index options) in general would be good. ...
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1 vote
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Why deep in the money options have very low liquidity

I understand that OTM options with low deltas are not that attractive, hence liquidity is less. But how about deep ITM options, why is the liquidity not there? Deep ITM options are a cheap way to ...
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6 votes
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Are companies like EquityZen legitimate and useful?

There are a list of companies claiming to provide liquidation for employees who have ISOs in private startups but don't have the means to exercise them (because of the ridiculous amount of phantom tax ...
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A liquid ETF that tracks the us dollar

Are there any liquid ETFs that track US dollar. I can only find this one, but this has very low daily volume (~70k shares) http://www.horizonsetfs.com/pub/en/etfs/?etf=DLR&
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Nasdaq vs Nasdaq Trade Reporting Facility

I was sorting through some market data today and was sorting between the three largest ECN/Exchange market centers that I have access to. The top three are: Nasdaq. Nasdaq Trade Reporting Facility. ...
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Should a retail trader choose a broker with access to dark pools

Often brokers advise their access to a 'huge' dark pool. If I were an institution trading big lots, then surely I would choose a broker like this. But as a retail trader, does this influence my choice ...
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22 votes
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Are precious metals/collectibles a viable emergency fund?

My friend received a gift from a family member in the form of silverware. The exact value is unknown but it is enough to cover 6+ months worth of expenses. I estimate it is a significant portion of ...
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1 vote
1 answer
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How important is volume when choosing an exchange?

I'm investing some money in ETFs; buy and hold. My local currency is CHF. I have an account in Interactive Brokers. So far I've operated on the London Stock Exchange, which means I have to do a forex ...
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Relationship between liquidity and an efficient market

If I have two securities A and B(they can be any combo of stock, etf, index, option ), then is it oversimplification to assume that if A has a more liquid market than B, then A is more efficiently ...
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