Options Jive

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Stock Market Tradeoffs

Options Jive

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

ETFs are less volatile than their holdings. This makes ETFs more attractive to option sellers as the chance of outlier moves is less than an individual stock.

However, when looking at the volatility relationships between stocks and their respective ETFs, it's important to note that the price of the options in the individual stocks reflects the higher volatility.

The reason we slightly prefer to trade ETFs more is because the expected move tends to overstate the actual move more often than in individual stocks which can have more outlier moves.

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