Multi-leg strategies
How do I evaluate the liquidity of inner vs outer strikes when structuring complex 4-leg positions?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Inner (near-the-money) strikes generally have tighter bid-ask spreads and higher open interest, while outer strikes in 4-leg structures can be illiquid, increasing slippage on entry and exit.
How it works
Evaluating liquidity involves checking open interest, daily volume, and spread width for each leg individually, since even one illiquid leg can distort the overall fill price of the combined order.
An example
Before placing an Iron Condor, a trader checks that all four strikes have active quotes and reasonable spreads, avoiding outer strikes with $0.50-wide markets on a $1 option.
Risk & limitations
Illiquid outer legs can make exiting adjustments costly or impossible at fair prices, and using market orders on wide spreads can erode much of the intended edge.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.