Why would you start Options Trading ETFs

Trading ETFs

When we start with options trading should we start trading single options or should we start with ETFs?  Exchange-traded funds or ETFs are one of the most important and valuable products created for individual investors in recent years. ETFs offer many benefits. They are an excellent vehicle to achieve an investor’s investment goals.

An ETF is a basket of securities that you can buy or sell through a brokerage firm on a stock exchange. ETFs are offered on virtually every conceivable asset class from traditional investments to so-called alternative assets like commodities or currencies.


Why do you want to trading ETFs?

Trades often knows individual companies much better than funds. Do they carry the same risk and probability of profits?  Let us examine this.

ETFs come in handy when investors want to create a diversified portfolio. There are hundreds of ETFs available, and they cover every major index (those issued by Dow Jones, S&P, Nasdaq) and sector of the equities market (large caps, small caps, growth, value).

When initiating a trade, the parameters we primary look for are:

  • Liquidity
  • Recent price action
  • Recent implied volatility movements
  • Potential market moving catalysts

While single stocks tend to have higher implied volatility and more opportunities of High IV Rank, the ETF IV has been historically overstated more often than individual equities. This gives us more of a trading edge in ETFs.

Tune in to hear Tom and Tony discuss why we start with ETFs!

Source TastyTrade: Why We Start With ETFs


When we first look to start trading, should we trade singel stocks or diversified ETFs? We have a look at liquidity, recent price action, Implied volatilty, and potential market moving catalists.

Single stock tend to have higher IV and IV Rank. But is IV and IV Rank the only factor we should consider?The stocks Walmarkt, Apple, CMG and Netflix have more implied volatily. So you can earn much money

begin trading ETFs











Individual equities carry more risk such as company risks, e.g. mergers/axquistions, dividends, earnings etc.

ETFs trade with lower levels of Implied Volatilty. ETF  IV has been historically overstated more often than individual equities, meaning we have more of a trading edge when using these products.





When we look at the above table we see that the ETF stays more within their range than individual stocks do. So trading ETFs is less risky than individual stocks.


  • Trading ETFs typically have a lower over IV, but the IV has historically been overstated more frequently.
  • Equities will trade at higher IVs due to additional company specific risks.
  • Not all ETFs are diversified, as some track specific commodities.


If you like this post see also the study trade-sector-etfs