Weekly Options – Online Article on Trading Weekly Options

Here is good article found online on Weekly Options and a method for trading them. The author brings up some good points on the weeklys as well as what seems to be a logical and sound method for trading them…

“Ever since the inception of weekly options on the major ETFs, I have been trading them consistently, though I have only written about them sporadically.

In this article, I will go over a lesson about complex spread execution on the weeklies. I love to enter my short verticals, or iron condors, just before the bell on Friday afternoons. The logic behind it is very simple: Sell the theta over the weekend and suffer limited market exposure due to the fact that over the weekends, the markets are closed. Certainly, there is always a possibility of a gap up or down, which I am willing to take. Rewards are always tightly connected with the risk.

Anyhow, last Friday just before the bell, I was placing a spread on two ETFs:SPY (S&P 500 tracking exchange traded fund) and IWM (Russell 2000 tracking exchange traded fund).

The First Trade: Iron Condor on SPY

At 12:43 pm PT, just about 17 minutes before the bell, I sent in my SPY iron condor trade for a credit of 26 cents and it filled instantly. The fact is that the spread was trading at 22 cents as natural and 26 as the mid price between the bid and ask spreads of these multiple-leg options. The exchanges would “naturally” want to give me less money for my spread, so asking 26 cents, or the mid price, seemed like an aggressive trade. The moment I sent in the order, I was instantly filled….”

To read the rest of this article please visit the source by clicking here

This entry was posted in Weekly Options. Bookmark the permalink.