So apparently, stocks that trade options are more stable than stocks that do not?

Question

If a stock is more widely held, would it follow that that stock is more stable than one that is not?

Answer 1

I'd say stocks that trade options are more likely to be more stable than stocks that do not, but there certainly are exceptions.

For example, NEOG does not trade options, but it is very stable compared to AGIX and ZOLT, both of which do trade options.

Answer 2

Enron was VERY widely held. Hopefully that answers your second question!

To your answer your first question, you have the cart before the horse; stocks that exhibit a certain degree of stability are just more likely to have options available on them, that's all!

Only buy stocks in companies you understand; if you cannot honestly explain how a particular company generates income and makes a profit, you have no business risking your hard-earned money in the stock of that company!

Happy investing...

Answer 3

Of course, but your causation is backwards. Firms offer options on compamnies they believe to be more stable to minimize their risk.