Why Weeklys Work
Weekly options’ premiums are lower than those of standard/monthly options 75% to 80% of the time
Weekly options’ Bid/Ask Spreads are generally tighter than those of standard/monthly options
Weekly options have the Liquidity and the Action
Weekly options carry a much lower Aggregate Extrinsic Value Decay
Weekly options generate far greater percentage return gains
Weekly options are ideal for smaller accounts
Weekly Options Basics
Options give their buyers Rights without Obligations. Option buyers participate when a stock moves their direction, but they do not suffer ever increasing losses if/when a stock moves against them.
Options come in two types: Calls & Puts.
Call options are meant to replicate a stock position. They go up in value as their underlying stock moves higher in price. But Call options limit losses in instances when the stock moves in the opposite direction.
Put Options are meant to replicate a short stock position. They go up in value as their underlying stock moves lower in price. But Put options limit losses in instances when the stock moves in the opposite direction.
Trade in the Zone
Weekly Options always cost the least and have the most leverage at the end of the week.
Weekly Options are often priced lower than the expected move in the underlying stock. That is because almost all of the Time Value has already decayed in Weekly Options. They are very inexpensive. As such the stock may move more than the combined premium of a Weekly Call and a Weekly Put.
Therefore we can often buy a Non-Directional Straddle and/or Strangle and profit greatly no matter which direction the stock moves.