Revolving Credit Spread with Weekly Options

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Weekly Options – Revolving Credit Spread

While a lot of older school and more ‘traditional’ option income traders may not be too excited regarding weekly options, if they took a minute to step back and take a bigger look, I think they would see that there are actually a lot of new and really interesting benefits to using them in their trading. In addition, there are some really solid trading strategies that can be used with them – creating a variety of ‘hybrid’ option income trades that weren’t really possible before.

Unless you’ve been living under a rock, I’m sure by now you are aware of the new weekly options trading vehicles available to us option traders (that is, assuming you are into option trading). Weekly options are simply options that are created every week with just one week of life in them. It’s similar to the more traditional monthly options during their final week to expiration – except these come out every single week. They come out every Thursday morning and expire the following Friday – ‘living’ for just eight days in total.

A lot of the more traditional option income traders /teachers have the opinion that investors should be completely out of  option income positions during expiration week due to the various risks that come up during that time period which can make it difficult to properly manage and adjust an option trade that suddenly goes against you.

However, if a trader chooses to use option strategies that do not necessarily need management or adjustments – for instance the weekly options revolving credit spread trade – these ‘expiration risks’ don’t really apply as they are part of the overall plan in the trade.

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