Liquidity

Liquid options have narrow bid-ask spreads, meaningful size displayed at the bid and ask, and regular trading through the day. Illiquid options have wide spreads and little size, so entering or exiting a position costs more and large orders move the price.

Liquidity varies between underlyings and within one option chain, where near-the-money strikes in nearby expirations usually trade more than far strikes and distant expirations. Open interest gives a partial clue, because contracts with more open interest tend to attract more quoting.

Illustrative example (hypothetical numbers, not a real trade): one call is quoted $2.48 bid and $2.50 ask with 500 contracts on each side. Another, on a smaller stock, is quoted $2.30 bid and $2.70 ask with 10 contracts on each side. Buying and immediately selling one contract costs $2 in the first and $40 in the second.