Let’s say I’ve picked a very liquid stock( a million shares a day traded in average) but there is no liquidity on options whatsoever, and assume I’ve bought 10 contracts, and there isn’t any buying or selling interest in options, and before expiration my position is
10 points in the money, will this position be profitable? Do I need buyers to sell my contracts to, or OCC obligated to buy it from me no matter what the situation is? And will the liquidity on that particular option, change the price of that option if it’s 10 points in the money?
You don't need to worry about clearing risk. The OCC handles all of that stuff for you. In your example, your primary concern would be liquidity. However, as long as you can find someone to make a market in your options, then you would be able to sell them. That market would probably be wide, but you would still make a great deal of profit off of your ITM options.
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