Best weekly option trading strategies


Because price action remained strong and the upper breakeven point was threatened, I chose to add an additional calendar spread to form a double calendar. In essence, what you are looking to do in this strategy to is to sell weekly call options against existing stock holdings covered calls or purchase shares and simultaneously sell weekly call options against the new best weekly option trading strategies holding buy-write. The weekly expiration of the sold call options allow you to collect additional income on your position, similar to a dividend but paying out each week. By mid day on August best weekly option trading strategies, 48 hours into the trade, the upper limit of profitability was being approached as shown below:. Unfortunately without the underlying stock, this weekly call option sale would require a substantial amount of margin within your portfolio, as the maximum potential loss on the trade is theoretically infinite.

Prior to the recent availability of these weekly options, calendar spreads were typically constructed with around 30 days to expiration in the short leg. One of the very liquid underlyings that has actively traded options is AMZN. This is a phenomenal way to take advantage of option leverage and limit decay.

This action required commitment of additional capital and resulted in raising the upper BE point from to a little over as shown below. Stay tuned for Part 2 where we discuss how to easily and efficiently identify attractive weekly options trade candidates every day…. Hit and run calendars must be aggressively managed; there is no time to recover from unexpected price movement. Selling naked puts, in theory put-call parity is equivalent to a buy-write strategy though skew and margin requirements alter the picture a bit. If the second calendar had not been needed to control risk, the returns best weekly option trading strategies have been substantially best weekly option trading strategies.

In essence, what you are looking to do in this strategy to is to sell weekly call options against existing stock holdings covered calls or purchase shares and simultaneously sell best weekly option trading strategies call options against the new stock holding buy-write. I continued to monitor the price, knowing that movement beyond the bounds of my range of profitability would necessitate action. Calendar spreads reliably achieve their maximum profitability at the expiration Friday afternoon of the short leg when price best weekly option trading strategies the underlying is at the strike price. Shortly after adding the additional calendar spread, AMZN retraced some of its recent run up and neither BE point of the calendar was threatened.

This is just best weekly option trading strategies example of the use of options in a structured position to control capital risk and return significant profit with minimal position management. The weekly expiration of the sold call options allow you to collect additional income on your position, similar to a dividend but paying out each week. By mid day on August 31, 48 hours into the trade, the upper best weekly option trading strategies of profitability was being approached as shown below:. Thus traders can now more cost-effectively trade one-day events such as earnings, investor presentations, and product introductions. Stay tuned for Part 2 where we discuss how to easily and efficiently identify attractive weekly options trade candidates every day….

Remember that a calendar spread is a two-legged spread constructed by selling a shorter dated option and buying a longer dated option. This situation is called a positive volatility skew and increases the probability of a successful best weekly option trading strategies. Because price action remained strong and the upper breakeven point was threatened, I chose to add an additional calendar spread to form a double calendar. I closed the trade late Friday afternoon.

The indication to exit the trade was the erosion of the time premium of the options I was short to minimal levels. If the second calendar had not been needed to control risk, the returns would have been substantially higher. The weekly expiration of the sold call options best weekly option trading strategies you to collect additional income on your position, similar to a dividend but paying out each week.

I closed the trade late Friday afternoon. Because of the exponentially high time decay in weekly options, best weekly option trading strategies traders prefer to sell weekly options and understandably so. Weekly options provide traders with the flexibility to implement short-term trading strategies without paying the extra time value premium inherent in the more traditional monthly expiration options. The indication to exit the trade was the erosion of the time premium of the options I was short to minimal levels.

Over time the best weekly option trading strategies call strategy has outperformed simple buy-and-hold strategies, providing greater returns with two-thirds the volatility. By mid day on August 31, 48 hours into the trade, the upper limit of profitability was being approached as shown below:. Weekly Options Covered Calls.