In general, sell stock and options with high volatility and buy stock and options with low volatility. Liquidity Options strategies must be applied in specific market conditions to be money-makers. Liquidity is one of these market conditions. Liquidity is the ease with which a market can be traded. A plentiful number of buyers and sellers boosts the volume of trading producing a liquid market.
Liquidity allows traders to get their orders filled easily as well as to quickly exit a position.
The best way to discover which markets have liquidity is to actually visit an exchange. The pits where you see absolute chaos are markets with liquidity. As long as there are plenty of floor traders screaming and yelling out orders as if their lives depended on it, you will probably have no problem getting in and out of a trade. However, I tend to avoid the pits where the floor traders are falling asleep as they read the newspapers. These are obviously illiquid markets and it would not be a wise move to place an options-based trade there.