Software stocks have made quite the name for themselves last year
Options trading continues to thrive and shows no signs of slowing down, as seen when 2024 set another record for options volume. While lists of the best and worst stock performers are readily available, this analysis takes a different approach, focusing specifically on the top stocks for options traders. My analysis includes calculating straddle returns for individual stocks throughout 2024 and ranking them based on various return metrics.
How Data Was Pulled
To determine stocks that have had attractive options, I calculated returns on four-week straddles starting in 2024. A straddle consists of buying a call option and a put option on a stock. The call and put should have the same strike and expiration date. In one sense, this takes direction out of the equation because the position can profit whether the stock goes up or down.
The stock, however, must sustain a direction one way or the other within the four-week timeframe for the straddle to pay off. A significant two-week move up followed by an equally significant two-week move down results in a big loss for a four-week straddle. In short, while a straddle can capitalize on movement in either direction, the sustained direction for the holding period is a critical factor for profitable returns.
Profitable Straddle Plays
The data below considers stocks with ample option liquidity that have had weekly expiration dates available at least some of the time over the past year. It assumes you purchased a straddle at the end of every week that had an expiration date four weeks away. Furthermore, it assumes you held the straddle until expiration and closed the position at intrinsic value.
Going by the average straddle return, the table below shows the top 20 stocks for straddle plays since 2024 (using this method). I also show the percentage of straddles for that stock that were positive and the percentage which would have doubled your money. The last column shows the percentage of the positive straddles that were positive due to the call option. In other words, of all the positive straddles, it’s the percentage that was positive due to an increase in the stock price as opposed to a decrease in the stock price. Five of the top 10 spots on this list are occupied by software or technology companies.
Below is another list of 20 stocks that were good straddle plays in 2024. These are stocks whose straddles had the highest percent positive. These stocks wouldn’t have earned you the most money with their straddles, but they turned out winners more consistently than others.
Finally, here is a list of stocks whose straddles doubled most often. These stocks had options that were most likely to give you a big winner.
