Options trading is not for novices, but for seasoned investors who want to add another dimension to their portfolios, hedge against risk, limit downside losses or take big chances in the pursuit of outsized gains. Options offer a lot of, well, options.
Best Options Trading Stocks at a Glance
While the best stocks for options trading will be different for every investor, there is a reason that some are traded far more heavily than others. If you’re considering entering the exciting world of options trading, keep reading to learn about the stocks that are experiencing some of the highest trading volume, as well as to get a better understanding of how options trading works and what you stand to gain and lose.
Only you can determine the best options trading stocks for your individual investment strategy, but you stand to benefit from understanding why the securities with the highest options volume are as popular as they are. These are some of the best options trading stocks:
|Company||90-Day Average Options Volume||Segment|
|SPDR S&P 500 ETF Trust (SPY)||8,250,026||Tracks the S&P 500|
|Invesco QQQ Trust (QQQ)||3,354,395||Tracks the Nasdaq-100|
|Tesla (TSLA)||2,302,658||Electric vehicles|
|Apple (AAPL)||1,051,079||Consumer electronics and software|
|iShares Russell 2000 ETF (IWM)||965,736||Tracks the Russell 2000|
|Amazon.com (AMZN)||743,472||Internet retail|
|Advanced Micro Devices (AMD)||699,675||Semiconductors|
|AMC Entertainment Holdings (AMC)||495,052||Communication services and entertainment|
|Meta Platforms (META)||428,872||Communication services, internet content and information|
|Microsoft (MSFT)||443,664||Technology, software and infrastructure|
|Palantir Technologies (PLTR)||418,481||Technology, software and infrastructure|
Which Stocks Are Best for Options Trading?
The following stocks have experienced the highest trading volume among options traders over the last 90 days.
1. SPDR S&P 500 ETF Trust (SPY)
This exchange-traded fund tracks the S&P 500 index. The S&P 500 represents the 500 largest publicly traded U.S. companies and is the leading benchmark for the stock market as a whole. It’s the most heavily traded on this list by far because many options traders like to bet on the future performance of the stock market, in general, instead of the direction of just one company.
2. Invesco QQQ Trust (QQQ)
This exchange-traded fund tracks the nonfinancial stocks on the Nasdaq-100, so it’s heavily weighted toward tech. The large-cap growth stocks in the tech sector are more volatile than the market as a whole.
3. Tesla (TSLA)
Tesla has been trading with high levels of implied volatility. That means that options traders expect major price swings in one direction or the other in the near future. Part of the reason for all of that implied volatility might be due to Elon Musk, its unpredictable and controversial leader.
4. Nvidia (NVDA)
Nvidia experienced enormous price swings last year as its primary technology fell in the crosshairs of a trade war with China. The stock’s 12-month price target is about 38% higher than the current price, but an increasing number of analysts recommend holding the stock, which suggests they anticipate that more volatility lies ahead.
5. Apple (AAPL)
With a market cap of more than $2.8 trillion, Apple is the biggest company in the U.S. Traditionally, that level of size and stability makes a company an unlikely candidate for options trading, but its trading volume and volatility keep it on this list.
6. iShares Russell 2000 ETF (IWM)
This ETF tracks the Russell 2000 index, known as the small caps. Unlike the large-cap giants with 12- and even 13-figure market capitalizations, small-cap stocks are known for the kind of high volatility that options traders crave.
7. Amazon.com (AMZN)
While dwarfed by Apple’s $2.8 trillion market cap, Amazon’s $1.48 trillion cap makes it America’s fourth-largest publicly traded company and the fifth largest worldwide. However, its stock fell precipitously in the second half of last year. It since has bounced back, but some analysts say it’s overvalued based on projected earnings growth.
8. Advanced Micro Devices (AMD)
The U.S. government has taken steps to prevent AMD from exporting its most advanced and sophisticated chips to China, sparking the kind of wild volatility that options traders love to bet for — and against.
9. AMC Entertainment Holdings (AMC)
AMC seems to have found a place as a perennial meme stock. After roughly a year and a half of steady decline, the stock shot up from around $10 to over $56 during the spring of 2021 — before tanking two months later.
It’s trading near its 52-week low of $7.05, and the 12-month target is $15.80. But analysts rate it a “hold.”
10. Meta Platforms (META)
Meta has soared 156% since the beginning of the year, and analysts are increasingly bullish as a result of user growth. In fact, Yahoo Finance calls it a strong buy.
That said, the company’s metaverse investments haven’t yet paid off, and economic challenges have dampened advertising revenues.
11. Palantir Technologies (PLTR)
Palantir stock is up 145% year to date and 109.63% over the past year, making it one of the fastest-growing artificial intelligence stocks. A number of hedge funds, including ARK Investment Management, have shown interest recently, with Two Sigma Advisors increasing its holdings by more than 1,400%, according to Insider Monkey. However, Morgan Stanley recently downgraded Palantir from equal weight to underweight, and three analysts watching the stock in September recommend selling.
Is Options Trading Better Than Stocks?
Options are no better or worse than stocks, bonds, mutual funds, futures or cryptocurrency. They’re just another asset class that has a place in many investor portfolios. Because they derive their value from an underlying asset, options are classified as derivatives.
Those underlying assets are typically 100 shares of stock, but options contracts can be written for just about any asset class, including commodities, bonds and currency. Different investors use options for different reasons, like to hedge against market downturns, for income or as a speculative bet made in pursuit of large gains.
Can You Get Rich From Options Trading?
You can get rich from trading options, but according to Merrill, most options investors use strategies that limit their risk but also limit their potential for gains.
One of the reasons that options trading is so attractive is because there’s room for profit during times of volatility, no matter which direction the volatility moves. Options traders bet on the direction they believe a security, an index or the entire stock market will take in the future. It also gives them the flexibility to buy or sell the assets in a contract by the contract’s expiration date without obligating them to do so.
However, some strategies, like uncovered short calls, expose options traders to the potential for unlimited losses. When you purchase options as a long call, on the other hand, the potential for gains is unlimited, but the maximum loss is limited to the premium paid.
Which Option Is Best for Day Trading?
According to DayTrading.com, options were not typically a part of traditional intraday trading until recently. Now, however, day traders commonly incorporate options trading into their strategies.
It’s important to note that day trading is risky and carries the potential for fast and significant losses — adding options into the mix only raises the stakes. Before you begin to think about what style of options trading is right for you as a day trader, consider the amplified risk.
According to Bloomberg, options day trading took off during the pandemic, when people were trapped at home, often out of work and stuck experimenting with ways to make money. The outcome was predictable — during the bull run that took place after the original COVID-19 crash, day traders lost $1.14 billion trading options.
Options trading is riskier and more complicated than standard buy-and-hold stock investing — but that doesn’t mean that everyday retail investors can’t learn how to do it. Learning, however, should come before doing. Conduct as much research as you can and decide on a strategy before you dive into options trading.
Once you think you’re ready, sign up for a brokerage account that lets you test your strategy with a trading simulator in real time before you put actual money on the line.
Daria Uhlig contributed to the reporting for this article.
Data is accurate as of Sept. 11, 2023, and is subject to change.
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- Merrill. "What are the Benefits & Risks?"
- Market Chameleon. "Unusual Daily Option Trading Spikes (Relative to 90-Day Average)."