Weekly Options Strategies
Another low maintenance way to play weekly options is to use LEAP options and then trade weekly options against it similar to how you would do with a covered call type of options trade.
Weekly Options – LEAPS
LEAPS (long-term equity anticipation securities) are longer term options. Instead of expiring in weeks – or a month – LEAPS can have a life span of months and even years. In fact – they are not even ‘options’ – they are ‘securities’.
You can think of using LEAPS as ‘leasing’ options. You can take advantage of movements in stocks and ETF’s using LEAPS – which can be much more affordable and provide a lot more leverage.
Weekly Options – AAPL Example
Let’s say you want to take a position in AAPL – but you don’t want to put up the amount of money it would take to create a stock position. You can instead use an AAPL LEAP option – let’s say an ‘in the money’ option with a fairly high delta – and due to the smaller amount of money needed to invest in this type of position – one could still create a much more affordable similar type position to take advantage of an opportunity.
Another great weekly options strategy that can be used will LEAPS options is use them as a stock ‘surrogate’ for a covered call type of position. Instead of using the actual stock as the base position for a covered call play – a LEAP can be used – and then the option trader can sell weekly options against that leap – potentially every single week – bringing in premium much like a covered call type position only with much less capital at risk. Also, if you were to compare these two strategies against one another – you would most likely find that the return on investment is far greater when using the LEAPS weekly options version.
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