Watched a good little video today on ‘the allure of weekly options’ (you can get access to this video from our resources area of the website by clicking here).
What is the allure of weekly options?
A lot of it has to do with the fact that with weeklys we are ‘living’ in expiration week every single week.
Weekly Options Expiration
Expiration week is probably the most ‘exciting’ time in an options life. A lot of that has to do with the fact that options are decaying at their ‘fastest’ rate during this time period – and since weekly options only have a life span of 1 week, the entire existence of this trading vehicle is ‘living’ in this most ‘sped up’ – and exciting part of it’s options cycle.
Before the weeklys, we option traders had to wait every thirty days for this options trading ‘event’ to take place (options expiration). Now with the weekly options – we get it every week.
Also, due to the fact that these are options with such little time life in them – they can be very cheap – and whether you are buying them as hedges – or selling them for income or to take advantage of volatility – or actually any number of reasons – they can provide great advantages to option traders because of this.
Weekly Options Leverage
Options in and of themselves provide great leverage – and the fact that they are constantly decaying and losing value – can really be taken advantage of by option traders who know what they are doing – and who know how to harness and tweak that fact to their trading advantage.
The birth of weekly options simply ‘magnifies’ that potential advantage and leverage that traditional options provide. The weeklys take the whole options concept – and compresses it for the option trader – giving him/her the ability to use this tool a total of 52 times a year now where before they were limited to using it just once a month – or twelve times a year.
When all is said and done – weekly options have given us option traders way more flexibility and leverage in this trading game.