Hey traders,
When most folks look at a stock, they only focus on the price.
But if you’re trading options, there’s another number that should always be on your radar: beta.
What Beta Tells You
Beta measures volatility. By definition, the S&P 500 has a beta of 1.
- If a stock has a beta greater than 1, it tends to move more than the market.
- If it’s less than 1, it moves less.
That volatility is what drives option prices. More movement means fatter premiums.
Why I Care
When I’m selling options, I want juice. I want contracts that actually pay me for taking on risk.
That’s why I lean toward stocks with betas over 1. They swing more, and the options market reflects that with higher premiums.
It doesn’t mean I’m chasing wild small caps. (yes, there is such a thing as “too much beta”)
I still stick to liquid names where I know I can get in and out easily.
But all else being equal, higher beta means better income potential.
A Real Example
Take IBIT. Its beta is well over 1 — which means it moves. And because it moves, the options are rich.
That makes it a great candidate for strategies like selling puts and covered calls.
The Takeaway
If you’re ignoring beta, you’re flying blind.
Because volatility is what makes options valuable. And beta is one of the simplest ways to measure it.
So before you sell a put or a call, check that beta.
It might just be the difference between a thin payday and a fat one.
Trade well,
Jack Carter
P.S. My scanner just flagged a high-beta stock — and the setup could play out over the next week or so. I’m calling it the #1 ticker to trade. Click here to see how it all works!
