one of the easiest ways is to look at its historical volume. you can do this from nseindia website.
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The best way to check the liquidity of a scrip to check its impact cost.
To do this, see the top bid and ask price of the stock, for example if the Bid is 75, and Ask 77, then the bid-ask spread is 2 (77-75)…and its Impact cost would be 2 divided by the average of (75 and 77) which is 76.5.
In this case it would be 2/76.5 = 2.61%…which is quite high, hence I’d consider the stock to be illiquid.
For a liquid stock, the impact cost should be really really low…maybe less than 0.02%.
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What would be the typical impact cost for nifty options? In a weekend, I could see spreads 79.50 : 81.50 at the money! That is 2.66%.
How could one earn then???
Is it because Im watching this in a weekend??
Thanks.