Advantages of weekly vs monthly options ?

Discussion in 'Options' started by rfriend73, Mar 6, 2013.

  1. Any thoughts, opinions, experiences with using weekly vs monthly and having success or failure ?
  2. newwurldmn


    no difference. just different expiries. monthly options eventually become weekly options. some unique stuff around jan monthly and index mar/june/sep/dec but that's about it.
  3. zdreg


    there are big differences in terms of cost and liquidity and the greeks. flippant responses like the above should be taken with a grain of salt.
  4. In theory, weeklies are a better deal.
    In reality, monthly are a better deal.
    Two reasons.

    There may be too much down time "between" weekly trades, as you look for the next trade, thus resulting in a lower dollar and % return result at year end.
    Also, if I see a stock and trade I really like, in terms of strike, credit, otm cushion, tech support, probability, quality, ect.... there is no way I'm going to lock in a "puny" weekly credit, just to see the stock take off sometime during the week.

    When i see something i really like, I assume it won't stay there for long.
    Thus, I intend to make some real money on it when given the opportunity.
    And that means locking in the stock for a longer contract.

    On the other hand, if you are not too picky about your stock selection, and it's easy to go from one stock to another, then the weeklies are a better deal.

    The weeklies will give you a calculated higher % return per trade, but the monthy will probably earn more "actual dollars" for you at year end.
  5. newwurldmn


    what difference is there between the greeks?

    What difference is there in terms of cost (other than the obvious difference in maturity)?

    Liquidity is worse in third tier names (GMCR, LNKD, etc.), but I had to trade pretty decent size for it to be noticeable. In vol terms liquidity is worse, but in notional terms I haven't experienced any difference in liquid names. In illiquid names even monthly liquidity fades.
  6. If you bought a monthly call on a Monday with expiry on that Friday and also bought the same strike and the same security with a weekly option on the same Monday..would the 2 different options have the same price behavior and would the greeks also have similar activity ? Or would one be more efficient and profitable ?
  7. sle


    An option is an option, assuming the same economics (strike, expiration time etc).
  8. ktm


    Since no one has said it yet...It depends on what strategies you are using.

    The real benefit is in spreading between them and being able to be more granular in your approach with more strikes. If your strategies don't take advantage of the increased expiry frequency, then the benefit is likely moot.

    It's like asking if a car is better than a SUV. Depends on the person and what they are using it for.
  9. Nanook


    From CBOE: "Weeklys are not listed if they would expire on a 3rd Friday or if a Quarterly option would expire on the same day."
  10. Thnaks for the information..good to know.
    #10     Mar 7, 2013