8 Best Stocks for Options Trading in October 2024

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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 Stocks for Options Trading

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:

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. 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 the first half of 2024. The stock’s 12-month price target is about 10% higher than the current price, but analysts wonder how much higher it can go. An increasing number recommend holding the stock, and a consensus of analysts recommends “reducing,” according to MarketBeat.

2. 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.

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3. Apple (AAPL)

With a market cap of more than $3 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.

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 $3 trillion market cap, Amazon’s $1.97 trillion cap makes it the fifth-largest publicly traded company in the U.S. and 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.

6. Palantir Technologies (PLTR)

Palantir stock is up nearly 114.56% year to date and almost 164% over the past year, making it one of the fastest-growing artificial intelligence stocks. Only two analysts made recommendations for September, and both recommended selling. However, in August, two analysts recommended selling, six rated the stock a “buy” or “strong buy” and 10 rated it a “hold” (six) or “underperform” (four). Some investment firms, including Wedbush, are optimistic about its near-term performance. Deutsche Bank, on the other hand, recommends selling.

7. Intel (INTC)

Intel was the premiere chipmaker — the Nvidia of its day — but today it’s a mere shadow of its former self. Shares have performed dismally year to date and over one, three and five years. While it’s not down for the count, it might be ripe for takeover.

8. GameStop (GME)

GameStop is perhaps better known for being a meme stock than it is for its business, which is selling video game platforms and accessories, digital content, game downloads and collectibles. When shares rise, it’s likely due to fans pumping up the stock — the force behind a sudden spike from less than $5 to over $80 during a two-week period in January 2021. However, share prices have trended downward ever since, save for the occasional rally, such as the one that began in May but appears to have already run its course.

What Are Options?

Options are contracts that give investors the right to buy or sell an asset at a particular price, on or before a particular date.

The most basic types of options are “put” and “call” options.

A put option is one where the investor wants to buy an asset. Their option gives them the right, but no obligation, to buy it at their stated price, on or before the expiration date.

A call option is one where the investor wants to sell an asset. Their option obligates them to sell the asset if an investor with a call option exercises their right to purchase it before the expiration date.

In either case, they pay a fee for the contract. Their trade is successful if they’re able to buy at a discount or sell at a premium before the option expires.

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 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.

How Do Beginners Trade Options?

Options trading is a complicated and risky way to invest. That’s why experts warn novice investors against jumping in too quickly.

1. Learn How Options Trading Works

A vital first step is to learn everything you can about options from educational material on reputable broker sites, such as Fidelity and Schwab, and consumer-oriented sites such as the U.S. government one provided by the Financial Industry Regulatory Authority.

2. Try Paper Trading

Once you’re clear about how options trading works and are ready to try it out, open an account with a brokerage such as Webull that has “paper trading” — practice trading that lets you try out what you’ve learned without risking real money. This is a great way to try out trading options for different securities and test strategies to see what works and what doesn’t.

Once you’re trading successfully on paper, you can start trading for real.

3. Apply for an Options Trading Account

Because of the degree of risk involved in options trading, brokers require that you apply for an options trading account. The application helps the broker evaluate your investing experience and your knowledge about investing in general and options trading in particular. The broker must also verify that you meet the financial requirements for opening an account.

4. Fund Your Account and Begin Trading

If the broker approves your application, it’ll start you at a particular level that determines the types of options trades you can make.

From there, you can fund your account and begin trading.

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 Sept. 28, 2024, and is subject to change.

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