What Are Weekly Options?

Purpose: To Speculate on Major events e.g. Earnings event or FDA Drug Approval Event

Standard Options Premier: Standard Options expire once a month. This gives us 12 options expiration in a year. In another words, you can buy options in any of the 12 months of the year on a stock and the option will last for one month.

With the introduction of Weekly options, we now have options expiring every week giving us 52 options expiration in a year. For a sample month, the 3rd week is the options expiration week for standard options and NO weekly options are offered during that week. For the 1st, 2nd and 4th/5th week, we have weekly options that expire in approx a weeks time.

Sample Calendar- August

Sun Mon Tue Wed Thur Fri Sat Options Expiration Day Option Identification
1 2 3 1st Week- Ending Aug 2nd Friday Weekly 1 Option
4 5 6 7 8 9 10 2nd Week- Ending Aug 9th Friday Weekly 2 Option
11 12 13 14 15 16 17 3rd Week- Ending Aug 17th Saturday Standard Option(Monthly)- 3rd week! - No weekly options during this week!
18 19 20 21 22 23 24 4th Week- Ending Aug 23rd Friday Weekly 4 Option
25 26 27 28 29 30 31 5th Week- Ending Aug 30th Friday Weekly 5 Option

Options Expiration Calendar

Note: Weekly options are just like Standard Options(Monthly) in their last week.

Here's a rough buying guide to help you understand the concepts even better:
If today is 5th afternoon and the Earnings of stock A is on the 6th morning, Buy "Weekly 2" Option expiring on Aug 9th
If today is 12th afternoon and the Earnings of stock A is on the 13th morning, Buy "Standard" Option expiring on Aug 17th
If today is 19th afternoon and the Earnings of stock A is on the 20th morning, Buy "Weekly 4" Option expiring on Aug 23th
If today is 26th afternoon and the Earnings of stock A is on the 27th morning, Buy "Weekly 5" Option expiring on Aug 30th
If no Weekly Options are offered on the stock, then you have no other choice than to buy Standard Options.

Pointers

  • Standard Options expire on Saturday whereas Weekly Options expire on Fridays
  • Weekly options are available on selected stocks
  • Some brokerages do not offer Weekly Options yet
  • Weekly Options are similar to Standard Options in their last week(in terms of time value decay)
  • Exercising logic of Weekly Options is similar to that of Standard Options
  • Choose Liquid Mini Options! Please see link Illiquid Options on the left menu on how to spot Illiquid Options in general

Warnings

  • IntheMoney Weekly Options at expiration(end of the week) might get automatically exercised! Please sell the option before expiration unless you want to exercise it to buy actual shares.OutOfTheMoney Weekly Options should expire worthless and should just vanish from your brokerage account without your interaction.
  • Normally, Weekly Options are cheaper than Standard Options while still providing you with leverage and should normally be used to speculate on Earnings events. Weekly options are cheaper since they have less expiration time(1 week) than Standard Options(4 weeks). However, there can be a FEW instances in which Standard options are actually more cheaper than Weekly options. It is recommended that while placing an options trade, to preview the Standard Options(closest to the selected Weekly option) cost as well as the Weekly Options cost without hitting the final submit button on the brokerage site, to preview and check that you are in fact getting the cheapest Option of the two.
  • Stock prices normally make big moves on the Earnings day but in some cases the stock price might start fluctuating even before the Earnings Announcement date

A good website to view Weekly Options is OptionsXpress.
To preview a sample weekly option, navigate to https://onlineint.optionsxpress.com/OXNetTools/Chains/index.aspx select symbol: Aapl, Range: All, Type: Calls, Expiration:All and click View chain. Collapse the All the Options Chain on the left and you will see both Weekly and Monthly options.

Weekly Options Trading Recommendation:
While placing a Weekly options trade on the brokerage site, have the above optionsxpress chart for the selected stock for reference Up(unless you can find a better chart). Having a monthly calendar nearby to view options expirations is a good idea as well.




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