The best strategy for options
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- Expiry Date: Select the required expiry date.
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- Additionally, selling vertical credit spreads provides much less flexibility.
- When you identify a stock that is in a range here are your go-to strategies.
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- Option buyers are charged an amount called a "premium" by the sellers for such a right.
The trade has very little risk to the upside and is limited to the premium paid. The idea is that traders sell credit spreads or iron condors on options expiring on the same day.
I know a few traders who use this as their main strategy to trade for a living. There are also methods you can use to create stop loss orders so the trade should never experience a max loss even if it is a particularly volatile day.
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Using SPX options has an advantage in that there is no assignment risk because the options are cash settled. They are also highly liquid with tight bid-ask spreads.
Conclusion Weekly options provide a lot of flexibility for traders, but they are not without risks. Small price moves in the underlying stock can potentially have a large impact on a weekly trade. Monthly trades tend to move a lot slower, but the time decay is also slower. Weekly option strategies can be great for active traders who have the time to place and manage lots of different trades.
For those that are working full time or not in front of a computer much during the day, weekly strategies become much more difficult. Trade safe!
The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
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