Selling Weekly Call Options Creates A Paycheck Every Friday: Discover How

By Author: Timothy Leary
Total Articles: 4762
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Weekly call options, Weeklys, were introduced in 2005 and hardly anyone noticed! The offerings were limited to the SPX and the OEX. In June 2010, the offerings were greatly expanded to include some brand name stocks like Apple, Amazon, Bidu, Microsoft, Intel, Cisco, Netflix, to name a few, as well as ETFs like QQQQ, GLD, GDC, EEM, USO, SLV and more.

Weeklys come out every Thursday and expire the following Friday. There are no new Weeklys in the final week of traditional monthly expiration; you just use the final week offerings on all options.

Why are Weeklys so Awesome?

Bank More Premium!

As a covered call writer, you now get to write (sell) FOUR times a month! That is a huge windfall. The Chicago Board of Option Exchange (CBOE) is a business, and as a business it needs products that make money. Deciding to expand weekly options means they have to incentivize traders to use them; hence the higher premiums over the monthlies (when you add up 4 writes versus 1). Since we are early in the game here, I suspect that the market makers will experiment with pricing, so expect some fluctuations in pricing. ...
... Over the last 4 months, getting about double the monthly premium has been the norm. Sweet!

Massive Time Decay

As option sellers, we all depend on time decay. With Weeklys, time decay is greatly accelerated. If the stock is acting in its normal trend, there is usually a 25%-30% premium erosion from Thursday to Monday. It is like instant money. You can write near-the-money calls or at-the-money-calls and collect the higher premiums due to the rapid time decay.

Use a Short-Term Crystal Ball

It is much easier to look at what is happening in the week ahead than a whole month. So put away your 30-day crystal ball and dust off your 8-day crystal ball. It is so much easier to adjust if something happens, up or down, during the week than having to sweat out an entire month. Just reset new options to match the new trend, or take your money off the table. This is real flexibility.

No More Heebie-Jeebies During Earnings Week

How many times have you suffered anxiety attacks during earnings week? Well, now you can just sit it out. Weeklys offer the ultimate in flexibility. You can also trade the news that week before or after the event. Again, you can be in or out of the market weekly. THAT is flexible.

Super Size by Selling Weekly Puts

If your stock is trending upward, selling weekly puts in addition to your covered call for additional income can super size your return. Follow normal put selling rules for safety, meaning you sell below a strong support point, at least one strike out of the money and maybe more if the premiums are good.

It is amazing how many experienced investors and fund managers do not know much about weekly options. The word is spreading. There is a lot to know about the various covered call writing strategies for up, down or sideways markets. The more you learn, the more you earn.
About Author:
Tim Leary is a full time trader and writes (sells) covered calls, earning 3% to 5% monthly in bull and bear markets, with limited risk. To get a 50-page covered call writing report, click here. To learn more call strategies click here.