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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 |
|---|---|---|
| Tesla (TSLA) | 2,264,914 | Electric vehicles |
| Nvidia (NVDA) | 1,354,137 | Semiconductors |
| Apple (AAPL) | 938,863 | Consumer electronics and software |
| Advanced Micro Devices (AMD) | 785,276 | Semiconductors |
| Amazon.com (AMZN) | 579,230 | Internet retail |
| Palantir Technologies (PLTR) | 429,134 | Technology, software and infrastructure |
| Marathon Digital Holdings (MARA) | 424,621 | Finance, capital markets |
| Microsoft (MSFT) | 419,230 | 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. 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, but waning demand for electric vehicles and competition from other manufacturers are primary factors.
2. Nvidia (NVDA)
Nvidia experienced enormous price swings in 2022, as its primary technology fell in the crosshairs of a trade war with China. January 2023 marked the beginning of an upward trend that accelerated in early 2024. The stock’s 12-month price target is only a few percentage points higher than the current price, and an increasing number of analysts recommend holding the stock, but the stock is still a “strong buy” — which suggests analysts are divided on which way share prices will go.
3. Apple (AAPL)
With a market cap of more than $2.6 trillion, Apple is the second-biggest company in the U.S., behind Microsoft. 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.
4. 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.
5. Amazon.com (AMZN)
While dwarfed by Apple’s $2.6 trillion market cap, Amazon’s $1.8 trillion cap makes it America’s fourth-largest publicly traded company and the fifth largest worldwide. The stock has bounced back from a steep decline in 2022 but fell precipitously in the second half of last year. It since has bounced back, and most analysts see that trend continuing.
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6. Palantir Technologies (PLTR)
Palantir stock is up 37% year to date and 197% over the past year, making it one of the fastest-growing artificial intelligence stocks. Investor interest has surged recently, according to a Zacks Investment Research analysis of search trends on Zacks.com. Some analysts rate the stock a “sell,” but investment firms like Wedbush and BofA Securities are optimistic about its near-term performance. It’s no surprise that Palantir’s beta shows that shares are almost three times as volatile as the average stock.
7. Marathon Digital Holdings (MARA)
Marathon Digital Holdings is a digital asset technology company focused on bitcoin mining. Recent Securities and Exchange Commission approval of spot bitcoin ETFs — that is, funds that trade directly in bitcoin — has driven bitcoin trading and pricing to record levels, to the benefit of bitcoin miners. Despite strong earnings and revenue, the speculative nature of cryptocurrency investments has resulted in a whopping 5.4 beta score for volatility, which is a lot of risk for a typical investor but desirable if you’re trading options.
8. Microsoft (MSFT)
Microsoft, like other tech stocks, has made a strong showing since the start of 2023. It’s up almost 11% year to date and 57% for the past year, and it has a “strong buy” rating from analysts, who predict it’ll rise nearly 10% within the year. With a beta of 0.89, it’s currently less volatile than the overall market, but trading volume is high.
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.
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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.
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Final Take
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 March 17, 2024, and is subject to change.
