12min chapter

Flirting with Models cover image

Hari Krishnan – Hedging a Commodity Bull Market (S7E4)

Flirting with Models

CHAPTER

Liquidity Constraints in Commodity Options Market

This chapter discusses the impact of limited liquidity in the options market for commodities and its implications for modeling and research. The speaker explores the challenges of executing trades on underpriced out-of-the-money call options due to wide bid-ask spreads and limited open interest. They also highlight the importance of patience and gradually working trades in low liquidity markets.

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