Three Reasons to Trade SPY Options in Volatile Markets

Author

Jeff Williams
March 02, 2025

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Hey gang, happy weekend. I hope you’re excited for Monday to get going again in the markets.

Given the current market volatility, I wanted to highlight three key reasons why I love trading options on SPY and why I feel this can be advantageous during turbulent times:

  1. High Liquidity & Tight Spreads – In my opinion, the number one reason traders trade SPY options is liquidity. SPY options are among the most liquid in the market, meaning they have:

    • Tight bid-ask spreads, reducing trading costs.

    • High trading volume, ensuring easy entry and exit.

    • Efficient price execution, even in volatile conditions.

  2. This liquidity makes SPY options ideal for both short-term traders looking for quick moves and institutional investors hedging large positions.

  3. Lower Cost Compared to Stocks – Options allow traders to control 100 shares of SPY with significantly less capital than buying the ETF outright, making them more accessible for small accounts. Think about that for a moment, if I wanted to buy 100 shares of SPY at $590 it would cost me $59,000 dollars and if SPY moved 1% I could possibly bank $590 dollars. I mean not bad BUT who has $59,000 dollars laying around just to try and bank $590?

    With SPY options, I could buy 1 SPY call or put contract and if SPY moves .5% even I could potentially make 20 to 30%. So in this example I might buy 1 SPY call contract meaning I think SPY could trade higher and the options I trade usually cost around $500 per contract, which means a $500 investment. If my SPY contract does indeed make me 20% then I could bank $100 dollar profit with very little risking at the start.

    Take this example from about a month ago when SPY calls rallied 44% in just 45 minutes! That’s crazy and that’s why I love trading these options. Low cost and big potential.

*Note: Trading is hard, results not guaranteed and should not be expected to be replicated typically.

  1. Plenty of Learning Opportunities – SPY options offer exposure to broad market movements, making them a great tool for learning BASIC options strategies like buying to open and selling to close calls if you feel markets can go higher or puts if you feel markets can go lower.
    Each day I spent about 2 hours live teaching traders in our Market Navigator chat room on WHY I feel markets will go higher or lower and what exact trade I would make based off my morning thesis. This indeed is a great learning opportunity for many traders.

I hope you’ve learning something new about why I personally love to trade SPY options and for a little tid bit, I’ll be looking for markets to trade lower early this week with potential tariffs coming on Canada and Mexico but then a possible rebound mid week and into the close.

P.S. As always, for questions about Market Navigator or any of our services, contact our amazing sales team at 1-800-585-4488 / [email protected]. They’d love to hear from you!

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