The 20 most optioned stocks today

A Flanker recently sent me this tweet, which shows the 20 most traded stocks in the options market:

At first, I was a little confused.

Why would anyone care about what's happening on the derivative stock markets? What signal does that send to us as citizen-analysts?

But with 107k views for that post, clearly it's something people want to see.

What's really happening

These lists get posted every day by dozens of accounts on X (and elsewhere, to be fair).

The purported reason is always the same: this is where the smart money is positioning, watch where the institutions are better and front-run the move. It's even sweeter since we're in earnings season - so options activity is even higher than normal.

One of my favorite Mungerisms is, "show me the incentive, and I'll show you the outcome". Clearly these lists are circulating to drive views. Finance influencers get easy engagement because "TOP 20 OPTIONS TODAY" takes zero research and gets clicks from everyone who's either bullish on one of the names (confirmation) or on the sidelines (FOMO).

And when we go upstream, the ecosystem is even worse. Every options contract pays a broker. Robinhood made $319 million in options revenue in a single quarter this year. Webull, which just showed up at #19 on its own most-traded list (you cannot make this up), generated roughly 50% of it's revenue from equity and options activity. The exchanges get paid per contract cleared. Market makers earn the spread on every trade.

Every single person in that chain makes more money when you trade more. Nobody in that chain makes a dime when you buy Microsoft and hold it for 20 years.

But it's just another example of the same garbage diet we're constantly fed as individual investors.

Here's what raw options volume actually tells you, in Nerd:

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In English: FUCKING NOTHING. Zero signal. It's meaningless (maybe you could derive some meaning if you have a team of quants, a few super computers, and a bloomberg terminal). But for the other 99.999999999999999999% of us - it is totally, utterly, meaningless.

You cannot tell from a volume number alone whether someone is bullish or bearish. A big call trade could be a hedge fund making a real directional bet. It could also be a retiree writing covered calls on shares they've owned for 20 years. It could be a market maker offsetting inventory from a completely different trade. Same number on the leaderboard, three opposite stories. And when you look at how Options are tracked, even by [whats the form for insiders/F-4?] or [what's the form for congress to fill out] you don't really get insight to what the nature of the option is - they are intentionally (criminally imo) vague.

And it gets worse. Industry estimates suggest 60 to 70% of daily options volume is spreads, hedges, and plumbing. No directional view at all. So when Amit posts "1.75M NVDA contracts traded today," you're not looking at 1.75M people betting on Nvidia. You're looking at roughly 500K actual directional trades buried inside a mountain of hedging noise, going in a direction you cannot determine from the number itself.

A random list of 20 stocks would be more valuable. Or hell, give me a list of insider's buying the stock, or expanding margins... those are real signals to us. But then we still have to do our homework on the underlying business. That's the essential step too often missed (except Flankers are making this better :) )

</rant>

One more thing

This problem is getting worse, not better.

Zero day to expiry options trading has grown more than 5-fold in the past 3 years as of 2025 (I would bet it's accelerating faster today)

Again, show me the incentive... I will show you the outcome. In the old days, we had to pay broker's fees to buy stock. Robinhood ushered in a new era of removing that fee. But now, these companies are just as hungry for your money, and are finding (and incentivizing) shitty options (pun intended) to their clients.

Let's end this shit. Don't take the bait. Imagine you're buying a farm when you're buying stock. Know what you own, and why you own it.

However! I am curious about the companies on this list (I'm working on a video), so I will be scanning each of them and I'll report anything I find interesting in separate posts.