Options trading was officially introduced in 1972 by the Chicago Board Options Exchange (CBOE) with standard options, while calls and puts were further adjusted in 1977. The transactions for options trading were made easy, and options contracts came with standardized terms. Fast forward well over 40 years and options trading went on to develop with a new derivative, weekly options. Weekly options are similar to standard options and possess the same product specifications for other listed contracts, but are short term and expire on weeks when standard options do not. Weekly options expire almost every week, unlike monthly options that expire once per month.
Weekly options trading can result in extreme profits, but those profits can also be incredibly volatile if all market and stock factors are not considered prior to trading and while the trade is active. Traders of all kinds must utilize the best available trading strategies in order to produce consistent gains. This can be done by maximizing weekly options trading strategies.
Schaeffer's Investment Research offers a variety of weekly options trade recommendation services including Schaeffer's Weekly Options Countdown, Schaeffer's Weekly Volatility Trader, and Schaeffer's Weekly Options Trader. All of these weekly options trade recommendation services provide precise entry and exit instructions for each weekly options trade, as well as detailed commentary explaining the rationale for every trade so subscribers can learn directly from the professionals while still capturing profit in their own trading portfolios.
If you find yourself still skeptical about trading weekly options and what weekly options could do to transform your current trading portfolio, let this article provide you with exactly why you should be trading weekly options.
How do Weekly Options Differ from Monthly Options?
Weekly options and monthly options are actually quite similar—the primary difference between the two lies in the expiration dates. Monthly options expire every month on third Friday of the month, whereas weekly options expire almost every Friday and are issued on Thursdays.
Traders who were previously limited to just 12 options expirations each year with monthly options now have the opportunity to capitalize up to 52 expirations by adding the tool of trading trading weekly options to their trading portfolio.
Weekly Options are More Cost-Effective than Monthly Options
Weekly options do tend to trade at the lowest of prices as compared to monthly options. Weekly options are a lot less expensive than shares of the stock and also less expensive than standard options. This is because the time duration is extremely limited with weekly options, and traders have only a couple of days to wait for the underlying stock to make the predicted move. Do not be scared off by the quickness of these weekly options trading opportunities. The increased volatility within the weekly options trade holding period presents an increased profit-taking opportunity moreso than an increase in risk.
Weekly Options Listings Feature More Popular Underlying Stocks
Weekly options listings change every week, especially because the weekly options expiration period is limited. The CBOE is always in a constant process of listing attractive weekly options to increase trading volume. This is why traders have seen such a significant rise in the popularity of weekly options over the last few years. High-volume stocks are the most likely going to make it to the new weekly options list each week. This offers credible weekly options with an active trading base for option buyers and sellers. Additionally, the weekly options listings may also include stocks that are slated to announce big news in the near-term.
Weekly Options Allow Traders to Earn Profits and Cut Losses Faster
Keep in mind that, when it comes to weeklies, traders are capitalizing on a lot of volatility. Though the specifications are similar to standard options, the weekly options' short-term nature is what makes it a delicate game to play. With the ability to enter and exit positions more quickly, traders have a greater chance of refining his trading skills and maximizing his profits through repeated actions.
Weeklies can also help traders overcome losses faster. Unlike standard options with only 12 expirations per year, weekly options come with 40+ more expirations annually to help even out a trader's equity curve and make up for losses through volume of opportunities.
Weekly Options Maximize Profit Potential
Weekly options allow traders to profit during any kind of market environment. The short-term nature of weekly options trades calls for efficiency in a fast-paced stock market that can be highly unpredictable for long-term investments. With weekly options trades, traders can benefit from buying cheaper options and then selling them for more than purchased over a short period of time.
Regardless of the price movement, it is always possible to see triple-digit returns with weekly options buying. Unlike stocks that only benefit investors if the stock price increases, weeklies let traders benefit regardless of the stock price direction.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
