10
Jan

How to pick best call and put options for day trading?


For the record, I believe day trading options is almost always a bad idea. Do not take my answer as a recommendation to day trade.

There are several reasons that I think it is a bad idea, one of which is that for most options quotes must be in increments of $0.05 (if the premium is less than $3.00) or $0.10 (if the premium is greater than $3.00) which effectively creates a large vigorish. That particular problem can be mitigated by limiting your trading to the subset of options that trade in penny increments. Here is a list of stocks with options trading in penny increments:

A – Agilent Technologies, Inc.
AMD – Advanced Micro Devices, Inc.
CAT – Caterpillar, Inc.
FLEX – Flextronics International Ltd.
GE – General Electric Co.
INTC – Intel Corp.
JAVA – Sun Microsystems, Inc.
MSFT – Microsoft Corp.
QQQQ – Nasdaq-100® Trust Shares
SMH – Semiconductors HOLDRs
TXN – Texas Instruments, Inc.
WFMI – Whole Foods Market, Inc.
WM – iShares Russell 2000® Index
AAPL – Apple, Inc.
AMGN – Amgen, Inc.
AMZN – Amazon.com, Inc.
BMY – Bristol-Myers Squibb Co.
C – Citigroup, Inc.
COP – ConocoPhillips
CSCO – Cisco Systems
DIA – Diamonds Trust
DJX – Dow Jones Industrial Average index
DNDN – Dendreon Corp.
FCX – Freeport-McMoRan Copper & Gold, Inc.
GM – General Motors
MO – Altria Group, Inc.
MOT – Motorola, Inc.
NYX – NYSE Euronext
OIH – Oil Services HLDRS
QCOM – Qualcomm, Inc.
RIMM – Research in Motion Ltd.
SPY – SPDR S&P 500
T – AT&T, Inc.
XLE – Energy Select Sector SPDR
XLF – Financial Select Sector SPDR
YHOO – Yahoo!. Inc.
XSP – Mini SPX index
AA – Alcoa, Inc.
AIG – American International Group, Inc.
BAC – Bank of America Corporation BAC
BSC – The Bear Stearns Companies, Inc.
CFC – Countrywide Financial Corporation
DELL – Dell, Inc.
EBAY – eBay, Inc.
EEM – iShares MSCI Emerging Mkts. Index Fund
EMC – EMC Corporation
F – Ford Motor Company
GS – Goldman Sachs Group, Inc.
HAL – Halliburton Company
HD – The Home Depot, Inc.
JPM – JPMorgan Chase & Co.
LEH – Lehman Brothers Holdings Inc.
MER – Merrill Lynch & Co., Inc.
MNX – Mini-NDX Index Options
NEM – Newmont Mining Corporation
PFE – Pfizer, Inc.
RIO – Vale
SBUX – Starbucks Corporation
SNDK – SanDisk Corporation
TGT – Target Corporation
VLO – Valero Energy Corporation
VZ – Verizon Communications, Inc.
WM – Washington Mutual, Inc.
WMT – Walmart Stores, Inc.
XOM – Exxon Mobil Corporation

Within this subset of options, I would recommend you limit your trades to the more liquid options, usually those that are short term and near the money.

2 Responses to “How to pick best call and put options for day trading?”

  1. 1
    rajas203 Says:

    Look for options of underlying stocks with high volatility. These will have higher premium.
    References :

  2. 2
    zman492 Says:

    For the record, I believe day trading options is almost always a bad idea. Do not take my answer as a recommendation to day trade.

    There are several reasons that I think it is a bad idea, one of which is that for most options quotes must be in increments of $0.05 (if the premium is less than $3.00) or $0.10 (if the premium is greater than $3.00) which effectively creates a large vigorish. That particular problem can be mitigated by limiting your trading to the subset of options that trade in penny increments. Here is a list of stocks with options trading in penny increments:

    A – Agilent Technologies, Inc.
    AMD – Advanced Micro Devices, Inc.
    CAT – Caterpillar, Inc.
    FLEX – Flextronics International Ltd.
    GE – General Electric Co.
    INTC – Intel Corp.
    JAVA – Sun Microsystems, Inc.
    MSFT – Microsoft Corp.
    QQQQ – Nasdaq-100® Trust Shares
    SMH – Semiconductors HOLDRs
    TXN – Texas Instruments, Inc.
    WFMI – Whole Foods Market, Inc.
    WM – iShares Russell 2000® Index
    AAPL – Apple, Inc.
    AMGN – Amgen, Inc.
    AMZN – Amazon.com, Inc.
    BMY – Bristol-Myers Squibb Co.
    C – Citigroup, Inc.
    COP – ConocoPhillips
    CSCO – Cisco Systems
    DIA – Diamonds Trust
    DJX – Dow Jones Industrial Average index
    DNDN – Dendreon Corp.
    FCX – Freeport-McMoRan Copper & Gold, Inc.
    GM – General Motors
    MO – Altria Group, Inc.
    MOT – Motorola, Inc.
    NYX – NYSE Euronext
    OIH – Oil Services HLDRS
    QCOM – Qualcomm, Inc.
    RIMM – Research in Motion Ltd.
    SPY – SPDR S&P 500
    T – AT&T, Inc.
    XLE – Energy Select Sector SPDR
    XLF – Financial Select Sector SPDR
    YHOO – Yahoo!. Inc.
    XSP – Mini SPX index
    AA – Alcoa, Inc.
    AIG – American International Group, Inc.
    BAC – Bank of America Corporation BAC
    BSC – The Bear Stearns Companies, Inc.
    CFC – Countrywide Financial Corporation
    DELL – Dell, Inc.
    EBAY – eBay, Inc.
    EEM – iShares MSCI Emerging Mkts. Index Fund
    EMC – EMC Corporation
    F – Ford Motor Company
    GS – Goldman Sachs Group, Inc.
    HAL – Halliburton Company
    HD – The Home Depot, Inc.
    JPM – JPMorgan Chase & Co.
    LEH – Lehman Brothers Holdings Inc.
    MER – Merrill Lynch & Co., Inc.
    MNX – Mini-NDX Index Options
    NEM – Newmont Mining Corporation
    PFE – Pfizer, Inc.
    RIO – Vale
    SBUX – Starbucks Corporation
    SNDK – SanDisk Corporation
    TGT – Target Corporation
    VLO – Valero Energy Corporation
    VZ – Verizon Communications, Inc.
    WM – Washington Mutual, Inc.
    WMT – Walmart Stores, Inc.
    XOM – Exxon Mobil Corporation

    Within this subset of options, I would recommend you limit your trades to the more liquid options, usually those that are short term and near the money.
    References :
    http://www.optionseducation.org/help/faq/general.jsp#26

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