Tiger Brokers is a global brokerage platform that gives Australian investors simple access to ASX and US stocks. Listed on the Nasdaq, the trading group’s Australian division is offering zero brokerage on both US stocks and ASX shares for the first 3 months.*

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Along with equities trading, Tiger Brokers also gives investors the opportunity to trade US stock options.

Options trading allows investors to ride the market waves by providing a mechanism to increase their exposure to price moves in specific stocks or sectors.

For investors, trading options can be particularly lucrative when volatility picks up — either by maximising exposure to a conviction trade, or by providing a simple hedging mechanism to protect the downside.

With volatility picking up at the start of 2022, options trades have been in strong demand on the Tiger Brokers platform.

In that context, here’s a list of the Top 10 most traded options on the Tiger Brokers platform last week:

TSLA — Tesla
BABA — Alibaba
PLTR — Peloton
AAPL — Apple
NVDA — Nvidia
NIO — Nio Inc
SPY — S&P500 ETF
AMD — Advanced Micro Devices
QQQ — Nasdaq ETF
00700 — Fubon Hang Seng China Enterprises ETF

The broad cross-section of different trades offers a broad guide on how Tiger Brokers options traders have been positioning to start the year, with plenty of activity in familiar tech names as well as ETF trades which represent exposure to broader index moves.

In line with those trades, Tiger Brokers chief strategy officer Michael McCarthy offered into how traders are navigating the two key risk events of 2022 — rising interest rates, and the Russia-Ukraine conflict.

Volatility is here

“Investors are bracing for even higher share market volatility as uncertainty generated by the Ukraine conflict feeds into existing worries about inflation and rising interest rates,” McCarthy said.

“After twelve years of extraordinary monetary support for the global economy, central banks around the world are increasingly hamstrung by rising prices caused by a combination of increasing post-Covid demand and supply bottlenecks.”

“The need to lift interest rates and withdraw stimulus funds is weighing on asset prices, and pushing analysts to downgrade company prospects, despite a potential economic boost from easing pandemic restrictions.”

“The conflict in the Ukraine adds to the existing inflationary pressures, with sanctions on Russia likely to put a brake on European growth while increasing prices for key commodities,” McCarthy said.

“Germany’s position as the largest European economy and its dependence on Russian gas add to fears of stagflation – rising prices amid a slowing economy.”

More conflict, lower rates?

“Despite these obvious pressures, some investors are clinging to hopes that the outbreak of war will see central banks maintain lower rates for longer, causing sentiment and share prices to see-saw,” McCarthy said.

“Energy stocks provide a rare bright spot in the near term as the potential for deep sanctions on Russian gas exports lifts oil and gas prices across the board.”

“Brent crude oil, the main European contract, burst through US $100 a barrel to trade 20% higher since the conflict began.”

“Stocks and ETFs exposed to cryptocurrencies could also benefit as speculation grows that Russia will turn to blockchain currencies as its access to the global banking system is cut off.”

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Options trends

Options activity in the US “points to investors dealing with pressure on high growth stock valuations and an overall negative outlook for markets”, McCarthy said.

“Global high-flyers such as Apple, Ali Baba, Tesla and Tencent are among the top traded stock options by Tiger Trade clients.”

“However, both S&P500 and Nasdaq index options are also in demand, potentially indicating a desire for protection against broad share market falls.”

*Pass through fees apply
Options trading carries significant risk and may not be suitable to all investors.
Read PDS, TMD &FSG on Tiger Brokers(AU)’s website before trading. AFSL 300767.
This article was developed in collaboration with Tiger Brokers, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.