In Which Derivatives Markets (E.g. Futures, Swaps, Options) Is the Cost of Immediacy Generally Highest? ▴ Learn

In Which Derivatives Markets (E.g. Futures, Swaps, Options) Is the Cost of Immediacy Generally Highest?

The cost of immediacy, reflected in the bid-offer spread, is generally highest in less liquid and more complex derivatives markets. This typically includes long-dated options, options on less popular altcoins, or bespoke over-the-counter (OTC) derivatives like certain swaps.

The low volume and high complexity mean market makers face greater inventory and adverse selection risks, demanding a wider spread as compensation.

What Is the Typical Theta Value for a Long-Dated Option versus a Short-Dated Option?

What Is the Difference in Theta Exposure between a Long Call and a Long Put?

Why Is a Central Limit Order Book Less Suitable for Complex Financial Derivatives?

Which Major Cryptocurrencies Typically Have the Most Liquid Options Markets?