What are the best stocks for options trading in 2018? We’ve included three lists to use when looking for stocks to trade options on:
- Best stocks (most popular according to options volume) for options trading overall
- Stocks with the most expensive options (great for options selling)
- Popular stocks under $20 with liquid options (great for options selling without large margin requirements).
Although these lists certainly do not highlight every stock with options in the world, it’s a great place to start if you’re looking for some fresh options trading ideas.
Also, if you’re an active options trader, check out the best options brokers of 2018.
Best Stocks for Options Trading Overall (Most Popular)
|Stock||Number of Options Traded Each Day (Average 50 day)|
These stocks are essentially the most popular stocks in the entire world. Since the stocks are so heavily traded, the corresponding options are also heavily traded and therefore highly liquid.
Whether you’re bullish or bearish, you’ll be able to efficiently express your market opinion if you trade options on any of these ten stocks. Trading options on illiquid stocks, stocks with less than 1,000 options contracts traded per day, can be dangerous and costly.
It’s difficult to enter and exit illiquid options markets, and it’s easy to lose money on wide bid and ask spreads. As such, it’s always recommended to trade liquid options.
Top 10 Stocks With Most Expensive Options
|Stock||Price of ATM Straddle (50 days until expiration)|
This is a list of stocks with the highest dollar value options in the US. Of course, the precise value of the stock and its options will fluctuate day-t0-day, but in general, these are the most expensive stock options in the market.
We calculated the average price by using the at the money straddle with 50 days until expiration. Expensive options are frequently sought after by options sellers, because selling expensive options results in more premium collected.
Moreover, when selling expensive options, fewer contracts are needed to establish a large options position. Where as, with low-priced options, many contracts are needed to establish a position with the same notional value.
Best Stocks for Options Trading Under $20
|Stock||Weekly Options Available|
This is a list of low-priced stocks (stocks under $20) that have highly liquid options. For smaller accounts, it is much easier to sell covered puts and covered calls on stocks that are inexpensive.
For example, to sell one put option for a $10 stock, only $1,000 – premium received, would be necessary to fully cover the trade and not use any margin. The same cannot be said for a stock trading at $800 per share.
Other Popular Choices for Options Trading
There are several other popular instruments besides stocks that have very liquid and heavily traded options.
SPY, or the SPDR S&P 500 Trust ETF, is an ETF that tracks the price of the S&P 500 Index. The S&P 500 index is comprised of the 500 largest publicly traded companies in America.
SPY options are very liquid and are one of the go-to options for traders looking to express an opinion on the “stock market.”
Other popular ETF and index options include:
- UVXY – ProShares Trust Ultra VIX Short-Term Futures ETF
- QQQ – PowerShares QQQ Trust ETF
- SPX – S&P 500 Index
- RUT – Russell 2000 Index
- VIX – CBOE Volatility Index