On a recent phone screen, I was asked the question, “Which stocks have the most liquid options?”
We will spend the rest of this article talking about what makes a stocks options liquid and specifically give you 10 stocks with the most liquid options.
Why Are They Liquid?
Boy, do I love this clip. Buddy wants to be a player huh?
Before we get into our top ten list, I want to briefly speak about why the list that follows have such liquid options. There has to be something that sets them apart from all of the other stock options that are not liquid right?
These stocks all of have a few things in common. They have very high volume in terms of stock volume traded in a day. If there is a stock with a lot of stock volume traded in a day…what does that mean? It means the big boys are playing in it. The Gekko’s of the world if you will. Activity from institutions, endowment funds, index funds, hedge funds, and pensions funds create the largest volume and when these guys trade, they trade in serious size. They are able to trade more than a few hundred shares at a time like the most of us. They trade in big blocks too…we’re talking tens of thousands of shares at a time. All day, every day.
If these big institutions are trading and owning quite a bit of stock (they definitely are, otherwise how do they make any money?) they have to be protecting or hedging themselves in some way right? Well of course! And the easiest way to do that is by trading in and out of the options for the stocks that they own all of those shares of.
Options for a stock are equivalent to 100 shares of stock, and the big boys trade in and out of these options all day to hedge their hundreds of millions of dollars of investment risk. Hedging by the big boys in over the counter derivatives for a stock (options) is the way to create these massive amounts of options volume.
Glad we got that out of the way.
Now onto the most liquid options.
The Top 10 Stocks With the Most Liquid Options
The S&P 500 Index ETF has the most liquid options in the world. How liquid you ask?
Contracts Traded: 2,672,772
Total Notional Value: $63,275,204,328
Largest Trade Size: 11,000
Largest Trade Notional Value: $260,414,000
This is why $SPY has the most liquid options in the world.
The Russell 2000 Index ETF has a ton of liquidity and falls into #2 on our list.
Contracts Traded: 500,335
Total Notional Value: $6,937,144,775
Largest Trade Size: 8,500
Largest Trade Notional Value: $117,852,500
Who knew small caps could be so big.
The Nasdaq Index ETF is a basket that mimics the Nasdaq index and finds itself in #3 on out list.
Contracts Traded: 490,118
Total Notional Value: $6,384,277,068
Largest Trade Size: 24,000
Largest Trade Notional Value: $312,624,000
Makes sense…Apple, Facebook, Amazon, Netflix, Google, and Microsoft all fall in line here.
The first stock on our list…Bank of America comes in at #4 on our list.
Contracts Traded: 394,245
Total Notional Value: $955,255,635
Largest Trade Size: 6,710
Largest Trade Notional Value: $16,258,330
Not bad for an individual stock. Most institutional investors trade in and out of Bank of America all day.
I bet you thought Apple might be higher on this list? Very liquid and huge notional value traded here but it falls to #5 on our list.
Contracts Traded: 362,485
Total Notional Value: $4,957,707,345
Largest Trade Size: 1,500
Largest Trade Notional Value: $20,515,500
Apple rounds out the top 5 of our top ten most liquid options list.
Probably a surprise to most, the Barclays Bank PLC IPath S&P 500 VIX Short Term stock is the only volatility index to show up on our list holding down the #6 spot.
Contracts Traded: 355,063
Total Notional Value: $642,308,967
Largest Trade Size: 25,981
Largest Trade Notional Value: $46,999,629
Pretty big for a stock that has ugly negative drag.
These ETF’s sure look like they have the most liquid options with the SPDP Gold Trust Gold Shares ETF coming in at #7 on our list.
Contracts Traded: 175,140
Total Notional Value: $2,096,425,800
Largest Trade Size: 20,000
Largest Trade Notional Value: $239,400,000
Facebook settles in as #8 on our list and #2 for technology stocks.
Contracts Traded: 148,868
Total Notional Value: $2,016,268,192
Largest Trade Size: 2,000
Largest Trade Notional Value: $27,088,000
Put that on your news feed for most active options.
Back at it with the ETF game at #9 on our list with the iShares MSCI Emerging Markets ETF.
Contracts Traded: 135,053
Total Notional Value: $519,683,944
Largest Trade Size: 10,250
Largest Trade Notional Value: $39,442,000
Rounding out our top 10 is the iShares Silver Trust.
Contracts Traded: 114,181
Total Notional Value: $198,674,940
Largest Trade Size: 7,700
Largest Trade Notional Value: $13,398,000
Stock with the Most Liquid Options Roundup
That finishes our list of the top 10 stocks with the most liquid options. Now again, this list was only compiled of stocks. This does not include futures or index options as those typically are too large to trade for readers. The similarities between the above top 10 are the facts that they are the easiest instruments in the world to trade. You can get in and out at any price and any size due to their insane amounts of liquidity. I suggest you make a watchlist of these top 10 as you should be looking at possible trades in them every day.