Weekly Options
Weekly options have come about as a result of increased volume on options trading. These weekly options are every bit the same as the monthly options. They contain the same right to buy or sell stock at whatever the set strike price. The only difference is that they expire each Friday. At first, weekly options were introduced 1 week at a time. For instance, a June Week 1 would be introduced that would expire the first Friday of June. A June Week 2 would follow the next week. There is not a week 3, since that is when the monthly options expire. As volume on weekly options continued to grow, multiple weeks were made available at the same time.
Initially weekly options were only available on the heavily traded broad market ETF’s: SPY, DIA, QQQ, and IWM. Shortly thereafter, certain big name companies, like AAPL, with heavy option activity were also included. Now many of the heavier traded stocks have weekly options to choose from.
The benefit of weekly options is the added choice of time. Instead of having expiration choices months apart, now we can choose from any week of the year. This greater flexibility allows us to time our options expiration closer to news events like earnings. Weekly options typically will also give us more pertinent strike prices based on the current trading of the stock. These may include $.50 or $1 or $2.50 increments on strike prices that may not be available on the monthly options.
The greater flexibility of the weekly options allows us to take advantage of many option strategies where we can find the expiration that is not too long, or too short, but just right.
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