Weekly Options – Implied Volatility Short Term

weekly options trading

Weekly Options

One of the nice things about trading weekly options is that we have the opportunity to get into a trade with such a short time frame that we might not necessarily need to be as concerned with volatility levels as we would need to be if we were placing trades using the longer term monthly expiring options.

Before the weekly options were introduced, if we wanted to place a monthly duration option trading strategy – say such as a calendar spread, a credit spread, diagonal spread, or iron condor – we would need to take a good look at – and be concerned with both price movement of the underlying – as well as the implied volatility level of the underlying – because we had apron 30 days we would potentially need to ride out this trade – and over a 30 day period both price movement and volatility levels could change considerably affecting our options trade.

Weekly Options – Implied Volatility

With the weekly options, although both are still a factor we should be aware of, the implied volatility level plays a much less determining factor – especially when trading extremely short term weekly options trading strategies like a one of two day calendar spread, diagonal spread, butterfly or iron condor. Price movement can make a significant impact on these trades – especially in the final days of option expiration – however implied volatility levels – although they certainly can change in these short time frames – usually it is not enough of a change in these very short time frames to make a significant impact on the options position – and whatever impact it does have – the final decay of theta in the options usually overcomes it.

Weekly Options – Learn More

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