Weekly options are very similar to monthly options they just operate on a weekly basis. Most weekly options are issued on Thursday morning and expire the following Friday.
The use of Weekly Options Credit Spread is a very common strategy frequently used nowadays by option traders. The good thing about this kind of option trading approach is that it is very uncomplicated to do and easy to understand. Another good thing, particularly for newer option traders, is the little amount of time required to manage and operate it. Another way to put it, is that credit spread sellers don’t need to be glued to their computer screens all day watching every tick of the market in order to generate consistent income with this trade.
In addition, the vertical spread should be given importance because it is an essential element of a number of other option spread strategies like the iron condor, the butterfly spread, the double diagonal, and many others. This is important especially for those who are new to weekly options trading. These new option traders generally resort to this kind of strategy once they have decided for the options and once they have purchased straight calls and puts, covered calls, and debit spreads.
Even if weekly options investors do not perfectly match the appropriate price direction and movement for an investment, they can still be successful in gaining continuous profit when they buy these vertical spreads. They just have to make sure that the investment is suitably handled. When sold well, credit spreads can bring the trader a good monthly return while the individual actually placing the trade could be incorrect with their belief and ‘prediction’ of where the stock market would be heading next.
For example let’s say our trader is bearish on the stock XYZ. With the XYZ trading high at the present, our trader can then give a anticipation whether the stock market would go up or not. They coudl choose to believe that it would not move any higher. A bear call spread is good for neutral to bearish circumstances so the trader sells this type of call option vertical spread.
If the anticipation of our Weekly Options trader is correct, the spread trade wins. If the stock does absolutely nothing and just remains trading at it’s current level, this trade wins. Even if the stock moves up against our traders outlook, this trade can win just as long as it doesn’t move up too much. However, if our trader fails to correctly handle the situation, the trade can lose the money if the stock market unexpectedly moves up at a faster rate. Therefore, the key is proper management and handling of this kind of situation.
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