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What Is the Risk of Holding an Option on a Highly Illiquid Altcoin?

High bid-ask spreads, difficulty executing trades, and potential for price manipulation due to low market depth.
Greeks.Live02.11.25

What Is the Risk of Holding an Option on a Highly Illiquid Altcoin?

The primary risk is a lack of market depth, leading to wide bid-ask spreads and difficulty in executing trades at fair prices. Illiquid options also have a higher risk of manipulation and may be hard to sell before expiration, forcing the holder to exercise or let it expire.

What Is the Practical Implication of a “Wide Mid-Price” in an Illiquid Options Market?
What Is ‘Slippage’ and How Is It Magnified by the Wider Spreads Found in Illiquid Altcoin Markets?
Why Do Market Makers Prefer to Trade at the Bid or Ask Rather than the Mid-Price?
How Does the Underlying Asset’s Volatility Affect the Options Bid-Ask Spread?

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