New options traders can quickly become overwhelmed when researching and choosing stocks.
Even experienced traders can struggle with narrowing their strategy and focusing on the right stocks.
David Jaffee of BestStockStrategy.com teaches his students how to identify the best stocks for options trading by creating a perfect watchlist.
With the right list of stocks, options traders can feel more confident and comfortable with their trades.
Some stocks for options trading can also help minimize risk and protect your investments.
Keep reading to learn more about stocks for option trading and how to choose the best option trading stocks.
Choosing the Best Stocks for Trading Options
David Jaffee considers the best stocks for trading options to be market leaders with large market capitalizations and liquid options.
As one of the best options trading coaches, David Jaffee has taught more than 1,500 students how to create their watchlist of stocks for options trading.
A refined watchlist of stocks can help you stay focused and avoid being swayed by breaking news or passing trends.
Focusing on market leaders with large market capitalizations and liquid options also helps minimize risk when trading options and improves your probability for profit.
With the right options trading strategy, you can win up to 98% of your trades.
Below are the companies that David Jaffee likes to trade.
- Amazon.com, Inc (AMZN)
- Tesla Inc (TSLA)
- JP Morgan Chase & Co. (JPM)
- Microsoft Corporation (MSFT)
- Mastercard Inc (MA)
- Visa Inc (V)
- Walt Disney Company (DIS)
- UnitedHealth Group Inc (UNH)
- PayPal Holdings Inc (PYPL)
Notice that all of these companies have strong, recognizable brands and are also market leaders.
How to Choose Stocks for Option Trading
If you want to know how to become successful at trading options, you have to learn the best options trading strategy.
The best options trading strategy includes choosing the right stocks and identifying your best opportunities.
David Jaffee teaches his students how to identify market leaders and the best stocks for option trading.
Traders do not have to spend hours researching each stock.
Instead, they can focus on strong brands with large market capitalizations to maximize their efforts when trading options.
Stop Researching Stocks
It is easy to fall into a research spiral, learning all there is to know about every stock.
Too many traders experience “paralysis by analysis” when they are overloaded with information and cannot make a decision.
Traders can actually save a lot of time and effort by focusing on market leaders with large market capitalizations and liquid options.
These types of stocks are widely covered by both institutional and retail traders. This means that almost all of the available information is already priced in.
Traders do not have to spend their time researching these companies or reading the latest news.
Focus on Strong Brands
The companies listed above are the best stocks for option trading because they have strong, recognizable brands.
These brands are extremely valuable, and they sell products and services that are used by large groups of people.
The loyal customer base, highly recognizable brand, and existing platform for each company helps minimize risk when trading because these brands are more likely to weather financial storms.
Look for Large Market Capitalization
The GameStop story took over the news when the company’s stock soared in 2021.
The success of the heavily shorted stock was a surprise to many and proves how easy it is for smaller companies to be manipulated.
David Jaffee encourages his students to focus on companies with large market capitalizations, usually more than $100 billion.
Large market capitalizations protect these companies from Reddit traders / Wall Street Bets traders.
It is much easier to manipulate a smaller company like GameStop or AMC Theaters than a company like Amazon because significantly less money is required to increase the market capitalization of smaller companies.
Maximize Your Efficiency
Finally, the right options trading strategy makes the best use of your resources.
It is more efficient and cost-effective to trade large companies.
The companies listed in this article that David Jaffee likes to trade all have liquid options with tight bid-ask spreads and low slippage.
As a result, they are more efficient to trade and carry a lower risk profile.
Even David Jaffee, an options trading genius with a large trading account, continually strives to improve his efficiency by trading large companies - he rarely trades smaller companies.
Learn the Most Successful Options Strategy
If you are new to options trading, you may wonder if you can make money trading options.
The answer is yes, but only if you have the right options trading strategy.
David Jaffee offers a comprehensive online options trading course that provides step-by-step instructions for new and advanced traders.
You can learn how to choose the best stocks for options trading and win up to 98% of your trades.
Visit BestStockStrategy.com to learn more and sign up for $400 worth of free training materials.