On most days, ETFs are among the most heavily-traded names in the investing world. This is a sure sign that active traders are using ETFs, a transparent, cost-effective way to trade market fluctuations, to gain access to a wide range of asset classes. Whether investors are looking to buy calls on the potential upside of an ETF , buy puts on a potential decline, or write options, in the well-established ETF names they are likely to find a willing counter-party.

Options are an additional tool used for speculation or risk control. Options can also be used to hedge a position, create low-risk trading strategies using numerous options, or to create an additional stream of income through writing options on already established ETF positions.

This ETF is consistently one of the most actively-traded securities listed on U. Daily call and put volume, with a strike price within several dollars of the current ETF price, usually accounts for , contracts or more in the nearest expiry month, with additional volume for strikes well away from the current price and with further out expiry dates.

There is likely to be open interest of hundreds of thousands of contracts at any given time. For those looking to trade the price of gold , this popular ETF usually does more than 5 million in daily average volume and is backed by physical gold holdings. GLD options are available across a wide range of strikes and expiry dates, though volume is generally focused around the nearest expiry, or a few months out, with a strike price near the current ETF price.

There may be open interest of hundreds of thousands on a given contract at a given time. Providing access to the often volatile Brazilian equity market , this ETF attracts active traders with its more than 15 million shares per day trading volume and established options market. Investors can expect trade contracts within a couple months of expiry and with active strike prices, and daily call and put volume of 1, to 3, contracts. The ETF usually does more than 18 million in daily volume, and has a very active options market.

Call and put volume is in the thousands to tens of thousands per day, depending on the strike and expiry date. Open interest can range from thousands to tens of thousands at very active strikes, and sometimes hundreds of thousands. Try our Free ETF Country Exposure Tool.

Open interest of a couple thousand shares is not uncommon in a wide array of front-month next to expire strikes, but will vary based on market conditions and the movement of the ETF price.

The most well-known silver ETF is backed by physical silver and trades more than 5 million shares per day. Volume occurs at very far-in and far-out-of-the-money strikes, with the more active strikes exchanging thousands of contracts.

Tip 7 - Trading ETF Options | Terrys Tips

Open interest can easily get into the tens of thousands on an active contract. Daily volume on near-term contracts, with strikes near the current ETF price, runs from the thousands to the tens of thousands with a large amount of open interest.

Like SPY , this is one of the most active of the ETF options markets. See our list of 17 ETFs for Day Traders. GDX tracks the price performance of a basket of gold miner stocks , consistently trading more than 30 million shares per day. Volume for active strikes can push upwards of ten thousand a day, but usually a few thousand is to be expected. This fund trades close to 40 million shares per day, can get extremely volatile, and has a very active options market.

Expect volume across a wide range of strike prices, since the underlying ETF can really move in a stock market panic or surge.

Many contracts will do several thousands in volume a day. With volume of more than 45 million per day, active traders have embraced EEM , which tracks global up-and-coming markets primarily in Asia and Latin America. Active contracts regularly see a few thousand contracts change hands in a session, and open interest can reach into the hundreds of thousands.

See also How To Use A Breakout Trading Strategy For ETFs. Very popular among options and shares traders, this financial-sector-tracking ETF does close to 30 million in daily volume.

A large number of strikes will do several hundred in volume, with very active strikes doing several thousand. Open interest can push upwards into the hundreds of thousands.

4 Basic ETF Option Trading Strategies

Daily volume is usually more than 12 million shares and up several thousand calls and puts for active strike prices. Open interest may get high during big moves, usually several thousand into the tens of thousands. Tracking the energy sector , XLE is one of the highest volume sector ETFs available next to XLF. Daily volume checks in near 15 million shares per day, and option trades occur across a wide range of strike prices.

Daily volume on active contracts ranges from a few hundred to several thousand. Open interest is often several thousand to tens of thousands depending on market conditions and the specifications of the call or put contract. For those looking to trade options on ETFs, many exist with daily activity. Ultimately, traders need a market that will allow them to get in and out easily.

For most traders trading several contracts at a time, these ETFs allow for that. On a daily basis, volume is usually centered around strike prices that are close to the current ETF price and nearer to expiry. Stick to trading these contracts as they generally provide the best opportunity for short-term gains.

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Subscribe to the ETFdb. Low Volatility ETFs invest in securities with low volatility characteristics. These funds tend to have relatively stable share prices, and higher than average yields.

Using ETF Options To Harvest Income And Manage Market Volatility | Stock News & Stock Market Analysis - IBD

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