Weekly options are an exciting addition to the financial markets in recent years and can provide a lot of trading choices for active investors. This is a long post but I will try to cover all the essentials to understanding what you need to know about weekly options. Weekly options trading has become popular in recent years as more investors and option traders realize the advantage that they offer for various trading strategies.

Therefore, weekly options really are just issued for the 1st, 2nd, and 4th Friday expiration of each month. If the expiration Friday is a holiday then the options will expire on Thursday instead. Also it is important to point out that different securities have different expiration days.

Your brokerage platform will provide all of the available options chains and their respective expiration date. You can take advantage of the rapid time decay of weeklies by implementing popular option strategies each week vs.

Monthly options that experience rapid time decay only 1 week a month. The main advantage of having weeklies is that they add to your ability to adjust your options positions especially for income traders every week and take advantage of faster time decay than you are able to with only monthly options. Intrinsic Value — A premium value derived from how much the option is in the money.

Each Wednesday the CBOE will release a list of options for the following Fridays expiration. This occurs every week except for the third week when monthly options expire instead of week options. You brokerage platform will show all available options chains for a security or you can always reference the list of stocks with weekly options and the Chicago Board Options Exchange website. Make sure you have an understanding of exactly when your options settle because certain index options will stop trading on Thursday but expire the next morning which has the potential to move against you overnight for settlement prices.

See chart below comparing how the various financial instruments work. Make sure you have a general understanding of how option prices work. Generally you will see faster time decay over the weekend and on the evening before expiration so you should keep those times in mind when positioning your trades. Directional trading strategies like buying calls or puts, debit spreads,etc… allow you to benefit from the leverage of options without having to pay up for as much time premium that you would traditionally with monthly options.

If you are going long weeklies for a short term trade then you generally want to only deal with in-the-money options because owning an out of the money options during expiration week will see rapid time decay and a decrease in delta.

Income trading strategies is probably a more popular strategy with weeklys where you are selling weekly options to collect the premium and benefiting from the rapid time decay of weekly vs. Popular income strategies include covered calls, credit spreads, iron condors, etcetera.

With income strategies you are betting that the stock will expire out of the money from your short options so you can keep the entire option premium. If you are more focused on selling options for income generation then you need to match your strategy with the strike price stock exchange of hong kong limited sehk goal of your trade.

Credit spreads using puts or calls are a popular options strategy that allows you to short one option and buy a further out of the money options in the same expiration period. The short option is closer to the money existing stock price san francisco stock broker fraud attorney the long option so you collect more stock options pinning on the short option than the you pay for the long option.

This difference generates a credit in your account. If the stock expires without moving past your short option strike price then you let the spread expire and keep the premium.

You want rapid time decay on credit spreads and a current events affecting the stock market expiration period so that the stock has less time to move past binary option money short strike.

Weekly options allow for this rapid time decay.

Credit spreads also involve a more advanced strategy called an Iron Condor which combines a credit put spread and a credit call spread. For More Details on Credit Spreads, See this post. You can keep selling a new weekly call put each week and the premiums collected each week can be used to pay your long call put in the out month. For example if you if you like a stock that you trade in forex is simple way of earn will move up over time you could buy far out call that expires in 6 months and sell near term weekly call against that long call every week to collect premium.

A common strategy with weekly calendar spreads is to adjust the strike price of the short call each week when the new weekly options come out depending on where the stock is. A diagonal spread is when your short call strike price is different than your long call strike price. Covered call writing is a popular options strategy where you own shares in a stock and sell calls against those shares to collect the option premium from those sold calls.

If the stock closes below the strike price on your short call then those calls expire worthless. The disadvantage is that selling calls on your long stock limits the upside to your stock if the stock rises above the strike price of your calls. Weekly options allow for the fast time decay that you want with covered call writing and allows you the flexibility to sell stock market crash hoax calls every week and also to adjust strike prices on the calls each week if the stock moves.

For more details on Weekly Covered callssee this post. To execute a collar trade for binary options zolotonosha stock you own, you would sell weekly calls each week to offset the cost of buying long-term protective puts on the stock.

The put acts like insurance against a drop and the calls would cap your upside but you could essentially lock your stock into a price range. Here are some additional summary thoughts that come to mind after my experience trading weekly options —.

From what I have seen and read, by writing options every week vs. Weeklies have higher gamma risk due to their short expiration period so that means they are more susceptible to moves in the underlying stock especially if trading close to the money strike prices.

Also, understand that premiums are lower for weekly options than monthly options since they are expiring quicker and therefore are pricing in lower volatility risk for weekly options vs monthly options. You must understand that since weeklies have a short time until expiration you really can only find decent premium selling closer to the money options, so you have to evaluate strategies a little differently than you would with monthly options.

For example, for option income traders meaning you sell options for premium credit you should be more aware of where a stock is on a chart when you trade weekly options vs. Most people who trade monthly options will base their option selling based on probabilities because the options are farther out of the money. With monthly option there is more time premium in farther out of the money strikes which allows you more cushion wider profit tent when executing something like an iron condor or double diagonal spread.

Generally, weeklies have the largest time decay over the weekend before their expiration week and the Thursday night before expiration so those are good time to position your trades in anticipation of that decay. During expiration day there are articles that have identified the highest time decay occurs after the first 90minutes of trading and then there is a lull and then decay picks up quickly in the last couple hours. I also linked to other posts throughout this article that I wrote about specific weekly options strategies.

Weekly options are great for income options traders looking to have constant time decay and also for directional traders that want lower cost bets on rapid moves. The key things to understand with weekly options is that with the shorter time to expiration then the farther out of the money options have less likelihood of moving in to the money and therefore the market prices that factor with lower premiums for farther out of the money options vs.

Pinning the Strike

In other words, with weekly options you are going to have to deal with closer to the money strike prices which results in higher risk of option prices moving against you. Overall, weekly Options are a great instrument if you understand the options strategies that you are implementing. Your email address will not be published.

Guide to Option Pinning at Options Expiration

KINETIC TRADER Home Trader Information Options Trading Learn Options Trading Trading Weekly Options Trading Systems Option Trading Courses All Trading Course Reviews Review of Stock and Options Trading Courses Menu. Trading Weekly Options Brian KineticTrader FeaturedOptions TradingSpotlightWeekly Options No Comments. If you are new to options, then understand that options can: Protect your investments against a decline in market price.

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