WEEKLY VS MONTHLY OPTIONS

Cost of Weekly vs Monthly Options

The price of an options contract, its premium, is calculated based on a number of elements. One of these elements is the amount of time that a contract has prior to its expiration date. Because weekly options typically have a very short amount of time to their expiration date, the premium is usually lower than that of the corresponding monthly options.

It is also possible to buy monthly options that are nearing their expiration date, and by doing so to purchase them at lower cost due to the decreased amount of time value. However, if you are doing this, make sure that there is a strong likelihood that the contract will become profitable within the limited time remaining.

Using Weekly vs Monthly Options with Short-Term Catalysts

Trading weekly options is a great way to take advantage of short-term opportunities, as they are designed for trading with a short time span. When there is an imminent event, such as the company reporting earnings, or major financial news, that is likely to significantly affect the price of a stock, this is an ideal time to enter a weekly option trade.

A monthly option could also be used, and if it is nearing expiration, then the cost may be comparable with using a weekly option. In either case, this type of trading requires a hands-on approach, monitoring the trade and being ready to implement a quick response to changing conditions.

Trading Choices with Weekly vs Monthly Options

When considering trading weekly vs monthly options, one very clear advantage to trading weekly options is that there are many more choices of expiration dates. While you can buy monthly options with only one expiry date within the month, weekly options offer at least three different expiry dates.

This range of expiration dates with weekly options allows for many different trading opportunities, including buying again when an existing trade is performing well.

An advantage of trading monthly options is that it offers better opportunities for traders who want to take a more relaxed approach to their trading. With monthly options, you can use a long call or a long leave it to sit after putting a sell price and stop loss in place.

A FINAL WORD ON WEEKLY VS MONTHLY OPTIONS

For a hands-on trader who wants to buy options for the best possible price and make quick and frequent trades, weekly options can be a great choice. Monthly options also offer plenty of opportunities for benefiting from trading stock options, and allows for a longer-term approach to trading. Both weekly and monthly options provide a way to benefit from price movement on the stock market for just a fraction of the cost of trading stocks, and allow you to profit from trading even when prices drop by using put options.

Whether you prefer trading weekly options, monthly options, or a combination of both, our membership services take the hard work and the guesswork out of trading options.