There is always some liquidity: you can nearly always get out of a position, it’s more a question of how long you’re willing to wait and/or how much it will cost you.
Recent financial crises demonstrated that under fairly unpredictable circumstances the liquidity of traded instruments can nearly vanish. The lack of liquidity coupled with the nature of modern derivatives led to massive fund redemptions, which consequently increased the pressure to sell into thin markets. The result? A rapid downward spiral of collapsing prices.
Download your free eGuide to learn: