Australian companies with public share ownership are listed on the Australian Securities Exchange (ASX). In April 2014 roughly 2,140 companies and securities were listed on the ASX. The number changes with every newly listed company, and with every one that ceases to exist.
When a stock is “optionable” investors are able to purchase “Exchange Traded Options” (ETO) on the underlying stock, giving them the right to buy or sell shares of the optionable stock at a set price. Not all companies whose shares can be traded publicly through an exchange are optionable though. The easiest way to check whether a stock is optionable is to go to the ASX website and check whether there are options listed for the particular stock.
Of the 2,143 stocks listed on the ASX in early April 2014, only 83 were optionable stocks. (Source is the “Options Code List” on the ASX website.)
Liquidity of ASX options
Some options are not necessarily traded as frequently as their underlying stock or as options over other stocks. They are less “liquid”. The liquidity of an option takes into account the daily volume and the open interest of that option. Low liquidity equates to a stock whose options are not frequently traded, while high liquidity refers to a stock which is traded heavily every day. Stocks with very low liquidity are called “illiquid”.
Options with low liquidity should be avoided, because it can be difficult to have your order filled, or to get a fair price.
Of the 83 optionable stocks listed on the ASX in April 2014, not all were liquid enough for us to trade them confidently.
Learn how to trade options
We have compiled a number of articles in this section, including topics like “What are stock options“, “What is a call option“, and many more. For even more detailed information please make sure you check out our Free Options Trading CD, which has a wealth of information for all levels of traders. Just fill in the order form and it will be in the post within 5 working days.
You should also definitely consider our Options Mastery Mentoring Program.