5 Best Stocks for Options Trading in August 2025

Globe and Mail

4 days ago

Options trading has been a preferred choice for traders and has consistently captivated them due to its potential for amplified returns, which comes with associated significant risks. But as the mantra of trading goes, the higher the risk, the higher the returns – options trading is the perfect testimony to that. Unlike traditional stock investing, options trading offers various advantages to traders, including flexibility, leverage, and strategy implementation, making it one of the most sought-after tools for active market participants. While options are very lucrative, they come with their associated risks of substantial losses if not traded with care, and there are brokers like Public.com which is one of the best platforms for options trading. Later in the article, we will look at 5 U.S. stocks that can provide sweet returns to options traders in the upcoming month of August 2025.
Understanding Key Factors for Options Trading
Liquidity is King: Liquidity is one of the most crucial factors in options trading. High liquidity in both the underlying stock and its options indicates tighter bid-ask spreads, which facilitate efficient trade execution with minimal slippage. In this assessment, two key metrics, average daily trading volume and open interest in the options chain, play a vital role. Active traders often look for stocks with active options markets, as they offer more flexibility in entering and exiting positions.
Volatility for Opportunity: The essence of options trading lies in volatility. The more volatile the stock, the higher the amount of premiums, offering better substantial profit opportunities. When discussing volatility, it is essential to understand the distinction between historical volatility (HV) and implied volatility (IV). The former is backward-looking and reflects past price movements, while the latter is forward-looking and points towards future expected movements. When options trading is involved, implied volatility plays a crucial role. A balanced approach where IV is good enough to create a premium opportunity, but not so high that options become overpriced or vulnerable to a post-event IV crush, is favorable for traders.
Fundamental Strengths and Catalysts: Every trade that happens in the financial markets is somewhat linked with what lies at the company's core. A solid company foundation adds a layer of confidence, especially during volatile periods when maintaining positions is crucial. Options traders often overlook the importance of strong fundamentals; however, metrics such as revenue growth, industry leadership, and profit margins are crucial. In conjunction with fundamental matters, event-driven catalysts such as earnings announcements, product launches, regulatory changes, and macroeconomic trends play a crucial role in determining well-positioned options trading opportunities.
Technical Analysis for Timing: A smart trader should always know when to enter and exit the market. Technical charts become a trader's best friend in this context. Tools like moving averages help identify trends, while the Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) help confirm momentum and potential reversals. All this helps in recognizing support and resistance levels, which facilitates the effective implementation of options trading strategies.
Methodology for Stock Selection
The market is highly dynamic, and stock selections are made by combining fundamental analysis, technical analysis, current market sentiments, typical sector behavior, seasonal trends, and the likelihood of upcoming events, such as earnings or macroeconomic shifts. The selected five stocks stand out in terms of their combination of all parameters and thus provide a favourable opportunity for options trading.
The 5 Best Stocks for Options Trading in August 2025
NVIDIA Corp (NVDA)
NVIDIA, the GPU giant and epicenter of the AI revolution, has consistently been at the forefront of the data center sector. The U.S. chipmaker has recently become the most valuable company in the world, reaching a $4 trillion market capitalization and surpassing tech giants like Apple and Microsoft. This event in itself points towards a bullish wave for the stock. Moreover, its 30-day IV of 34.9, compared to its 20-day HV of 25 points, suggests future volatility. The stock is expected to have even a higher IV after the recent market capitalization landmark news, and this volatility is expected to continue as the earnings release is expected on 27th August 2025, making it an ideal stock for options trading in the upcoming month. Since the outlook is bullish, strategies such as bull-call spreads benefit options traders, as they help lower costs and capitalize on directional upside. While the stock has performed consistently over the years, one should be cautious of any regulatory ruling or macroeconomic slowdown that could derail the stock's upside movement.
Meta Platforms Inc (META)
The parent company of Facebook, WhatsApp, and Instagram – the holy trinity of social media, Meta Platforms, is always one of the top stocks in the list of all traders, specifically options traders, because of the highly associated volatility Recently Meta has been developing a series of products and is working on advancing its AI-driven innovations particularly metaverse. With a market cap of $1.8 trillion, a 30-day IV of 38.1, and a 20-day HV of 24.9, along with its earnings scheduled for July 30th, the stock is poised to experience decent volatility, providing options traders with opportunities to bet on it. Moreover, competitive pressures and regulatory challenges also make the stock volatile. Although the charts indicate an uptrend, the stock price movement appears speculative due to regulatory headlines. In such a scenario, a calendar spread would be an ideal strategy to adopt, maximizing the benefit from the IV rise.
Apple Inc (AAPL)
The tech giant, known for its electronics ecosystem and revolutionary products, has always been a solid performer, whether in equities trading or options trading. Apple Inc. has consistently delivered strong returns to its investors. With the planned 2026 launch of its innovative products – from the iPhone 17e to the MacBook Pro to the foldable iPhone - Apple seems to be unstoppable. With its earnings scheduled for 31st July and dividend date of 11th August, Apple, with a current 30-day IV of 28.1, which is slightly less, and a 20-day HV of 19.9, is expected to have a fast bullish crossover, suggesting the implementation of a call debit spread positioned for a modest rally ahead of the announcements. If some traders have a neutral view on the earnings, they can also use an iron condor for the range-bound movements of the $3.15 trillion company's stock.
Tesla Inc (TSLA)
The EV leader is one of the most active, liquid, and volatile stocks in the U.S. market, making it an ideal choice for options traders. Tesla Inc. is expanding its business geographically and is all set to commence deliveries in India by August, which is expected to be a good source of revenue for the company. This announcement led to a significant upward movement in the stock's price. The $982 billion company's 30-day IV stands at 54.7, and its 20-day HV stands at 58, indicating the extreme volatility the stock exhibits. The earnings scheduled for 23rd July, along with geographical market expansion, provide sufficient room for options traders to place their cautious bets on Tesla. Since Tesla's stock is associated with high unpredictability, a long put or bear put spread can be used if signs of weakening delivery growth emerge, or a long straddle can be implemented if a significant move is expected but the direction is uncertain.
Amazon.com (AMZN)
The global e-commerce behemoth, with a market capitalization of $2.39 trillion, is dominating the consumer market, holding significant stakes in cloud computing (AWS), logistics, and digital advertising. Amazon's strong fundamentals and its role in cloud growth, coupled with its high liquidity, a 20-day HV of 23.5 and a 30-day IV of 35, make it a must-watch for options traders. Historically, Amazon has exhibited significant price fluctuations in the days leading up to and following its earnings releases. As the earnings are scheduled for August 1st this year, volatility is expected to spike. As margin compression in the e-commerce industry continues and regulatory challenges escalate, this may limit upside. In such a scenario, traders who already hold the stock and seek income can implement a covered call.