Which list ranks assets from most to least liquid? Before we can go ahead and answer this question we have to talk about a few things. First, there is no list (this is why we are making one). And the reason we say that there is no list is because there is no real list that actually answers “which list ranks assets from most to least liquid?” without any bias. Anything that you read from the institutions that may come out with a list about liquidity will for the most part only push their own products. Second, liquidity is king and it is the single most important filter anyone can make before making an investment or trade. Liquidity ultimately allows investors and traders to get in and out whenever they would like at whatever price they would like without the risk of being ripped off.
If we have liquidity, we can do anything we want at any size always at a fair price. And why is this the case? Because wherever there is the most liquidity, there is also the most competition. Competition and more of it is very good for investors as it creates an atmosphere where there is competition for your order. And when there is competition for your order, you get filled faster and at a better price. That is truly amazing.
Liquidity is a combination of a few things, Volume, bid/ask size etc. An easy way to find the stocks with the most volume would be the following. This will be a long way in helping us answer the question to “which list ranks assets from most to least liquid?”.
On any trading platform (we are using ThinkorSwim) you can filter like this. We chose the following to sort from:
- All optionable
- With volume over 10,000,000
- Price being greater that $15
This search returns the following results:
Which list ranks assets from most to least liquid? This will do for now. And you can see in order of highest to lowest volume who actually shows up on this list of stocks. What we find more interesting is the notional value traded per day in these stocks. That might help us get a more refined list. Here are the notional values of each of these stocks in the order they appear on the list above:
Pretty wild numbers. When we look at pure stock volume, this is the order that we get, however, here is the top 5 when we look at total notional value (price * volume):
But what about options volume? How does that come into play here.
Well for starters it differently does as the more options volume there is the more institutions are actively hedging their positions. Every option contract is worth 100 shares of stock. Let’s go through this list again and just add purely stock options volume.
Which list ranks assets from most to least liquid? We are getting closer. Now that we have options volume we get options notional value by taking the stock price * 100 * options volume because every option is worth 100 shares. Here are the results:
There is the list in order of stock volume with the total notional value of options traded. Here is the top five from this list:
Which List Ranks Assets From Most to Least liquid? Here We Go.
Four stocks appeared in the top 5 for both total notional value of stock traded per day and total notional value of options traded per day. If we combine stock notional and option notional, we can come up with our list of those four:
$SPY: $19,544,312,606 + $64,775,280,752 = $84,319,593,358
$IWM: $4,296,730,224 + $5,989,929,570 = $10,286,659,794
$AAPL: $3,015,211,293.40 + $5,672,665,629 = $8,687,876,922.40
$NVDA: $2,129,673,214.30 + $1,908,016,335 = $4,037,689,549.30
$EEM: $2,099,299,755.40 + $2,020,888,773 = $4,120,188,528.40
$BAC: $2,357,814,841.40 + $1,353,097,632 = $3,710,912,473.40
Enjoy trading 🙂