Buying weekly options involves purchasing an options
contract which is based on an underlying equity or stock. This contract gives
the holder the right, but does not obligate them, to buy a certain amount of
the underlying stock. The stock may be bought at a specific price, which is
known as the strike price, on a pre-determined date called the expiration date.
Buying the stock is referred to as exercising the option.
BUYING WEEKLY OPTIONS TO TRADE
Although the options can only be exercised on the expiration
date, they may be sold to another buyer at any time during the life of the
contract. Buying options contracts and then selling them again, ideally at a
profit, is generally described as trading options.
Trading options is the main
purpose of our trading alert service, offering suggestions for weekly options
which are likely to increase in value within a short period of time. Our
members then enter the trades by buying weekly options at or near a suggested price
and then selling them again when a target profit has been achieved.
GET YOUR FREE WEEKLY OPTIONS USA TRADING NEWSLETTER
LOOKING FOR CATALYSTS
Buying weekly options is an ideal way to trade options when
there is a catalyst which is likely to cause a high level of price movement
within a short period of time. This catalyst is often a report of earnings,
sales, or the launch of a new product from the company itself. It can also be a
general economic or news report that is expected to significantly impact the
price of the company’s stock.
BUYING WEEKLY CALL OR PUT OPTIONS
Whether the price is expected to go up or down, it is
possible to take advantage of this movement by buying weekly options. If the
anticipated price change is upwards, then a trader would buy a call option
which increases in value when the stock price rises. If the price is expected
to drop dramatically, a put option is a way to capitalize on this price movement,
as put options increase in value relative to the decrease in stock price.
WHEN TO BUY WEEKLY OPTIONS
Buying weekly options can be done up to six weeks in
advance, as these options are listed six weeks prior to their expiration date.
There are expiration dates available for weekly options every Friday, except
for the third Friday of each month, as that is the expiration date for monthly
It is often advisable to buy a weekly options contract
closer to the date around which the price movement is expected to occur. One
reason for this is that all options contracts are priced on a number of factors
including the amount of time value that they contain. This means that the price
paid, or premium, is generally higher when an expiration date is further away.
It makes sense in most cases to avoid paying a higher premium for time that is
BUYING FURTHER IN ADVANCE
The exception to this would be if you believe that very few
people are aware of a catalyst that is going to happen a few weeks later.
Closer to the date of this catalyst occurring, more people will become aware of
the event, and this may well drive the price up, even before the event occurs. Buying
weekly options further in advance may be a good choice in this type of scenario,
as closer to the date the price to buy in could be a lot higher.
WINNING WITH WEEKLYs
When trading weekly options, you need up-to-the-minute
knowledge of the events affecting the market, as well as an understanding of
which weekly options to trade, how much to pay for these trades, what strategies
to use, and when to enter and exit each trade.
If this sounds like a lot of work to you, don’t worry! Our
membership service does all of this for you, so join us today, and start
winning with weeklys.