What Are The Best Stocks To Trade Weekly Options?
I love to hear how I can help the OptionSIZZLE family. Through s sent to me and feedback surveys, I am able to get a better feel of what option investors are curious about and/or struggle with.
I’ve learned over the last five years it takes time for people to warm up to you and be able to express what they are having issues with.
So if you’re on the fence still, no worries. I’ll be here when you’re ready.
Usually the articles will follow an order of the most commonly asked first.
Without further ado…..
Q : What Are the best stocks to use for weekly options?
Now, weekly stock options offer a tremendous amount of opportunity for trading and hedging purposes. There are literally hundreds of tradable weekly options at your disposal.
How do I narrow them down and focus on the ones that offer me a fair chance at becoming successful?
Simple. I only trade weekly options that offer a competitive bid/ask spread.
Remember, in the open market, there are two prices for an option–the price someone is willing to pay–and the price someone is willing to sell that option.
When the buyer and seller agree on a price, a transaction is made.
I want the difference between the bid and ask price to be tight (not too far apart from each other). By the way, stock option bids and offers can be altered in penny, nickel or dime increments.
Facebook (FB) options allow you to adjust your bid or offer in penny increments.
The Priceline Group (PCLN) options allow you to adjust the bid or offer in dime increments.
I bring this up because I’ve heard some traders say that you should stick to trading options where the bid and ask can be adjusted in penny increments because they are competitive.
That’s great advice and can save you a lot of money at the end of the year.
However, focusing just on penny wide spreads will limit your options…….
I want to share with you another approach that will provide you a few more opportunities, while still keeping you out of the bad ones.
How can we tell if a weekly option bid/ask spread is competitive then?
I use a simple but powerfully effective market maker technique. I judge the bid/ask spread by the vega of the option.
Now, this might sound complicated…but it’s really not. Let me show you.
Here is a snapshot an option chain of Apple weeklies (only calls displayed). On my option chain, I have the bid and ask price displayed…along with the vega of the calls (displayed cVega in the image).
OK–so what I’m looking for is the difference between the bid/ask spread to be less than or equal to the vega of the option for it to be labeled a competitive option to trade.
For example, the 615 calls are 4.55b/4.65a…the spread is 10 cents wide– the vega is 29 cents. The vega of this call option is greater than the spread…making this a competitive option to trade.
If the bid/ask spread is greater than the vega of the option…it is not a competitive option to trade.
Let’s look at some more examples so you can get the hang of this.
Telsa (TSLA) weekly options…the bid/ask spread for the $207.50 calls is 3.60b/3.70a…the vega of the call is $0.10. Again, this is a competitive market. The spread is equal to the vega of the option.
Facebook (FB) options…the bid/ask spread on the $61.5 call is .82b/.84a…the vega is $0.03…again, this another competitive weekly option to trade.
Priceline (PCLN) options….the bid/ask spread on the $1197.50 call is $12.90b/$14.10a…the spread is $1.20 wide…however, the vega on this call is $0.57. This is NOT a competitive weekly option to trade.
Herbalife (HLF) options…the bid ask/spread on the $64 call is $0.76b/$0.97a… the spread is $0.21 wide…the vega on this call is $0.03. This is NOT a competitive weekly option to trade.
Keep in mind that option market dynamics can change. It’s important to constantly check if liquidity conditions worsen or improve.
For example, at the time these snapshots were taken… PCLN and HLF were not competitive options to trade.
However, that doesn’t mean conditions can’t improve at a later date.
By filtering weekly options in this manner, you’re giving yourself a chance to not getting hurt in “slippage. ”.
Remember, you have to overcome the commissions and the difference between the expected value of the option and the price that you actually execute the order–if the bid/ask spread is not competitive–you’ll get dinged on the way in and out of the trade.
Now, you don’t want a great trade idea to be a loser because you got “chopped up” from the bid/ask spread.
Of course, the better you get at trading–the less you will rely on rules…and the more you will rely on instinct and experience.
However, if you’re not there yet…having a rule of thumb like this… can really help you from making unnecessary mistakes.
By the way, this doesn’t only apply to weekly options…you can use it for standard options as well.
Have you ever gotten into an option trade and ended up losing because the bid/ask spread wasn’t competitive?
If so, I’d like to hear your story.
I’ll be hanging out in the comments section below.

List of options that trade weekly

Friday, December 15, 2017 10:37:52 PM CST.
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An Introduction To Weekly Options.
In 1973, the Chicago Board Options Exchange (CBOE) introduced the standard call options that we know today. In 1977, the put option was introduced. They have proven to be extremely popular as trading volume has grown at a compound annual growth rate over 25% between 1973 and 2009. Clearly, investors understand options, are becoming more comfortable with them and are using them in a variety of strategies.
Weeklys: A New Class of Option.
In 2005, 32 years after introducing the call option, the CBOE began a pilot program with "weeklys" options. They behave like monthly options in every respect like, except that they only exist for eight days. They are introduced each Thursday and they expire eight days later on Friday (with adjustments for holidays). Investors who have historically enjoyed 12 monthly expirations - the third Friday of each month - now can enjoy 52 expirations per year.
Investor interest in the weeklys has surged since 2009, with average daily volume at the end of 2010 exceeding 300,000 contracts. This can be seen in the figure below:
In fact, in the second half of 2010, the volume of the index weeklys increased to where they controlled between 5% and 7% of their underlying index volume at the time. Also in 2010, a popular trade emerged among retail account holders where they wrote covered calls using weeklys.
What Can You Trade With Weekly Options?
As of early 2011, the weeklys were available on 40 different underlying securities, including indexes and ETFs.
Indexes for the weeklys that are available include:
CBOE Dow Jones Industrial Average Index (DJX) Nasdaq 100 Index (NDX) S&P 100 Index (OEX) S&P 500 Index (SPX)
Popular ETFs for which weeklys are available include:
SPDR Gold Trust ETF (GLD) iShares MSCI Emerging Markets Index ETF(EEM) iShares Russell 2000 Index Fund (IWM) PowerShares QQQ (QQQQ) SPDR S&P 500 ETF (SPY) Financial Select Sector SPDR ETF (XLF)
Many popular stocks also have weeklys available. Given the investor interest in weeklys, it is very likely the CBOE will be adding even more securities. (You can find a complete list of available weekly options here: cboe/micro/weeklys/availableweeklys. aspx)
Weekly Option Strategies.
For premium sellers who like to take advantage of the rapidly accelerating time-decay curve in an option's final week of its life, the weeklys are a bonanza. Now you can get paid 52 times per year instead of 12. Whether you enjoy selling naked puts and calls, covered calls, spreads, condors or any other type, they all work with weeklys like they do with the monthlies - just on a shorter time line.
The Short-Term Advantage of Weeklys.
In addition, during three out of four weeks, the weeklys offer something you can't accomplish with the monthlys: The ability to make a very short-term bet on a particular news item or anticipated sudden price movement. Let's imagine it's the first week of the month and you expect XYZ stock to move because their earnings report is due out this week. While it would be possible to buy or sell the XYZ monthlies to capitalize on your theory, you would be risking three weeks of premium in the event that you're wrong and XYZ moves against you. With the weeklys, you only have to risk one week's worth of premium. This will potentially save you money if you are wrong, or give you a nice return if you are correct. (From picking the right type of stock to setting stop-losses, learn how to trade wisely, check out Day Trading Strategies For Beginners .)
Although the open interest and the volume of the weeklys are large enough to produce reasonable bid-ask spreads, the open interest and volume are usually not as high as the monthly expirations. The well-known pinning action that takes place in monthlys - whereby a stock tends to gravitate toward a strike price on expiration day - does not seem to happen as much or as strongly with the weeklys. Perhaps that will change as more institutions enter the weekly market. (Understanding the real forces that move prices is part of being a good trader, see Option Spreads: Introduction .)
The Downside of Weekly Options.
Because of their short duration and rapid time decay, you rarely have time to repair a trade that has moved against you by either adjusting the strikes or just waiting for some kind of mean revision in the underlying security. Although the open interest and volume are good, that is not necessarily true for every strike in the weekly series. Some strikes will have very wide spreads, and that is not good for short-term strategies.

List of options that trade weekly

Weekly options have become a stalwart among options traders. Unfortunately, but predictable, most traders use them for pure speculation.
But that’s okay.
As most of you know, I mostly deal with high-probability options selling strategies. So, the benefit of having a new and growing market of speculators is that we have the ability to take the other side of their trade. I like to use the casino analogy. The speculators (buyers of options) are the gamblers and we (sellers of options) are the casino. And as well all know, over the long-term, the casino always wins.
Why? …because probabilities are overwhelmingly on our side.
So far, my statistical approach to weekly options has worked well. I introduced a new portfolio (we currently have 4) for Options Advantage subscribers in late February and so far the return on capital has been slightly over 25%.
I’m sure some of you may be asking, what are weekly options. Well, in 2005, the Chicago Board Options Exchange introduced “weeklys” to the public. But as you can see from the chart above, it wasn’t until 2009 that the volume of the burgeoning product took off. Now “weeklys” have become one the most popular trading products the market has to offer.
So how do I use weekly options?
I start out by defining my basket of stocks. Fortunately, the search doesn’t take too long considering weeklys are limited to the more highly-liquid products like SPY, QQQ, DIA and the like.
My preference is to use the S&P 500 ETF, SPY. It’s a highly-liquid product and I’m completely comfortable with the risk/return SPY offers. More importantly, I’m not exposed to volatility caused by unforeseen news events that can be detrimental to an individual stocks’ price and in turn, my options position.
Once I’ve decided on my underlying , in my case SPY, I start to take the same steps I use when selling monthly options.
I monitor on a daily basis the overbought/oversold reading of SPY using a simple indicator known as RSI. And I use it over various timeframes (2), (3) and (5). This gives me a more accurate picture as to just how overbought or oversold SPY is during the short-term.
Simply stated, RSI measures how overbought or oversold a stock or ETF is on a daily basis. A reading above 80 means the asset is overbought, below 20 means the asset is oversold.
Again, I watch RSI on a daily basis and patiently wait for SPY to move into an extreme overbought/oversold state.
Once an extreme reading hits I make a trade.
It must be pointed out that just because the options I use are called Weeklys, doesn’t mean I trade them on a weekly basis. Just like my other high-probability strategies I will only make trades that make sense. As always, I allow trades to come to me and not force a trade just for the sake of making a trade. I know this may sound obvious, but other services offer trades because they promise a specific number of trades on a weekly or monthly basis. This doesn’t make sense, nor is it a sustainable and more importantly, profitable approach.
Okay, so let’s say SPY pushes into an overbought state like the ETF did on the 2 nd of April.
Once, we see a confirmation that an extreme reading has occurred we want to fade the current short-term trend because history tells us whenВ a short-term extreme hits В a short-term reprieve is right around the corner.
In our case, we would use a bear call spread. A bear call spread works best when the market moves lower, but also works in a flat to slightly higher market.
And this is where the casino analogy really comes into play.
Remember, most of the traders using weeklys are speculators aiming for the fences. They want to take a small investment and make exponential returns.
Take a look at the options chain below.
I want to focus on the percentages in the far left column.
Knowing that SPY is currently trading for roughly $182 I can sell options with a probability of success in excess of 85% and bring in a return of 6.9%. If I lower my probability of success I can bring in even more premium, thereby increasing my return. It truly depends on how much risk you are willing to take. I prefer 80% or above.
Take the Apr14 187 strike. It has a probability of success (Prob. OTM) of 85.97%. Those are incredible odds when you consider the speculator (the gambler) has less than a 15% chance of success. It’s a simple concept that for some reason, not many investors are aware of.
One Simple System to Win Nearly 9-out-of 10 Trades.
Regular investors dream about these kinds of opportunities – but few ever believe they’re real. Like dragons, the idea of making money on nearly 9-out-10 trades seems the stuff of legend… or if real, reserved exclusively for the market’s slickest traders. Yet, it’s very real. And easily within the reach of regular investors. You can learn all about this safe, simple strategy – and the next three trades shaping up right now – by clicking this link here. Slay your own dragon – Go here now. В.