15 ETFs With The Most Liquid Options

The largest ETFs don't always have the most liquid options markets.

Reviewed by: Sumit Roy
Edited by: Sumit Roy

Options are cheap. Investors are paying almost the least they've ever had to for options on stocks and ETFs as volatility levels dip into record-low territory.

Case in point is the CBOE Volatility Index (VIX), which measures the "implied volatility" of S&P 500 Index options based on how much investors are willing to pay for them. The VIX is at rock-bottom levels.

According to the Chicago Board Options Exchange, out of all the days the VIX has fallen below 10 in its history, nearly half of those instances have taken place in 2017. A level of "10" on the VIX is rarely broken, but that has been a routine occurrence this year.

Seldom Been Cheaper To Use Options

Cheap options are either a good thing or a bad thing, depending on who you ask. For investors looking to hedge their portfolios against a market decline using put options, or for speculators interested in betting on more gains in the stock market using call options, it's seldom been cheaper to do so.

The opposite is the case for options sellers. They aren't getting much in the way of a premium for writing options contracts.

In any case, low volatility is certainly not a knock on the options market—which remains as active as ever—particularly when it comes to exchange-traded funds. Below, we look at the 15 ETFs with the most liquid options markets.

SPY Trounces IVV

Just as was the case last year, the SPDR S&P 500 ETF (SPY) has the most liquid options market of any ETF or even stock. The world's largest exchange-traded fund, with $237 billion in assets under management (AUM), currently has 17.8 million options contracts outstanding—also called “open interest” (each options contract gives the owner the right to 100 shares of the underlying ETF; the right to buy in the case of calls; and the right to sell in the case of puts).

Bid/ask spreads on SPY options are often no more than a penny wide, minimizing transaction costs for those who want to hedge or speculate on the S&P 500.

Even though SPY is the largest ETF and has the most liquid options market, that correlation doesn't always hold true. There are plenty of big funds with illiquid or even nonexistent options markets.

Take the $119 billion iShares Core S&P 500 ETF (IVV). The second-largest ETF by assets only has total options open interest of 2,640. That's nothing for a fund of that size. Bid/ask spreads for IVV options are huge, making the fund a poor choice for options traders.


Some ETFs Punching Above Their Weight

After SPY, the iShares MSCI Emerging Markets ETF (EEM) has the most deep and liquid options market. The fund boasts total open interest of 6.6 million contracts, just a hair above No. 3 on the list, the PowerShares QQQ Trust (QQQ), with open interest of 6.5 million contracts.

The iShares Russell 2000 ETF (IWM), the Financial Select Sector SPDR Fund (XLF), the SPDR Gold Trust (GLD) and the iShares MSCI EAFE ETF (EFA) are a few other behemoths with active options markets.

Then there's also a number of ETFs on the list that are punching well above their weight. Those include the iPath S&P 500 VIX Short-Term Futures ETN (VXX), the United States Oil Fund (USO), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the iShares MSCI Brazil Capped ETF (EWZ), the VanEck Vectors Gold Miners ETF (GDX) and the iShares China Large-Cap ETF (FXI).

These ETFs have some of the most liquid options markets, even though they don't have a tremendous amount of assets. VXX, for example, only has AUM of $1 billion, while XOP has $2 billion in assets. That suggests these funds are popular with short-term traders—not a surprise considering that the VIX, oil, Brazil, gold miners and China are among the most volatile areas of the markets.

For a full list of the top 15 ETFs with the most liquid options, see the table below:


Ticker Fund Open Interest
SPY SPDR S&P 500 ETF Trust 17,771,528
EEM iShares MSCI Emerging Markets ETF 6,635,087
QQQ PowerShares QQQ Trust 6,488,055
IWM iShares Russell 2000 ETF 4,529,522
XLF Financial Select Sector SPDR Fund 3,886,407
VXX iPath S&P 500 VIX Short-Term Futures ETN 3,484,288
USO United States Oil Fund LP 3,502,854
GLD SPDR Gold Trust 2,942,741
EFA iShares MSCI EAFE ETF 2,541,963
XOP SPDR S&P Oil & Gas Exploration & Production ETF 2,385,889
EWZ iShares MSCI Brazil Capped ETF 2,198,495
GDX VanEck Vectors Gold Miners ETF 2,162,377
HYG iShares iBoxx $ High Yield Corporate Bond ETF 1,660,590
FXI iShares China Large-Cap ETF 2,071,668
SLV iShares Silver Trust 1,680,438

Source: Bloomberg. Data as of Monday, June 19

Contact Sumit Roy at [email protected].


Sumit Roy is the senior ETF analyst for etf.com, where he's worked for 12 years. Before joining the company, Roy was the managing editor and commodities analyst for Hard Assets Investor. He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing pickleball and snowboarding.