Can weekly strategies be profitable?

[spectastic]

I have read/heard multiple times that trading the weeklies may lead to short term profitability, but usually lead to long term failure. However, I imagine there are some exceptions. Those of you who've traded options for a long time, I'm curious what you think of these strategies.

- day trading atm/otm naked calls and puts that expire the same week (or next week if it's Wed-Friday) for quick scalp or breakouts.

- selling weekly otm credit spreads on stocks that are at or near supply/demand zones, and are likely to reverse. you're betting on where the stocks is unlikely to go, and because it's the final week for the contracts, theta is very high, so it's in your favor

- selling 0dte spx credit spreads, and closing either in the first hour or 2 or before power hour.

 

[tommcginnis]

I have read/heard multiple times that trading the weeklies may lead to short term profitability, but usually lead to long term failure. However, I imagine there are some exceptions. Those of you who've traded options for a long time, I'm curious what you think of these strategies.

- day trading atm/otm naked calls and puts that expire the same week (or next week if it's Wed-Friday) for quick scalp or breakouts.

- selling weekly otm credit spreads on stocks that are at or near supply/demand zones, and are likely to reverse. you're betting on where the stocks is unlikely to go, and because it's the final week for the contracts, theta is very high, so it's in your favor

- selling 0dte spx credit spreads, and closing either in the first hour or 2 or before power hour.

• "Weekly(s) strategies" is not a defining term -- there would be an entire range of reasonably positive strategies, as well as rare/unlikely profitable strategies.
• Further, the laying of high-gamma credit spreads demands careful monitoring -- putting short-DTE, OTM credit spreads on without such monitoring is like surfing blind-folded into a harbor. You WILL hit a hard and uncaring reality.
• Use of the term "supply/demand zones" marks you as already having been duped by somebody. My advice is to sit on your money until you can unlearn that garbage.
• For closing weeks' OTM options, theta decay is nearly linear, and even goes to zero in the closing periods. (Watch the IV↑.)
• regarding the re-purchase of SPX credit spreads -- consider buying only the shorts -- it'll be a 50|50 shot as to whether the vig will bleed you as much as the entire spread. YMMV.

 

[tsznecki]

I trade almost exclusively weeklies in a YOLO account. For the year I am up.

There are much easier ways to make money. If you have the capital to go long/short stock do it. Your PNL will be be much better.

I only trade debit spreads or outright long weeklies. Single stock only.

 

[spectastic]

• "Weekly(s) strategies" is not a defining term -- there would be an entire range of reasonably positive strategies, as well as rare/unlikely profitable strategies.
• Further, the laying of high-gamma credit spreads demands careful monitoring -- putting short-DTE, OTM credit spreads on without such monitoring is like surfing blind-folded into a harbor. You WILL hit a hard and uncaring reality.

I agree they should be monitored for breaches of important predetermined price levels. That would be part of risk management. It's a higher risk/reward strategy compared to going further out in expiration, which is why I ask if it could be viable long term.

• Use of the term "supply/demand zones" marks you as already having been duped by somebody. My advice is to sit on your money until you can unlearn that garbage.

I don't understand what you mean. Are you someone who thinks technical analysis is dumb?

• For closing weeks' OTM options, theta decay is nearly linear, and even goes to zero in the closing periods. (Watch the IV↑.)



• regarding the re-purchase of SPX credit spreads -- consider buying only the shorts -- it'll be a 50|50 shot as to whether the vig will bleed you as much as the entire spread. YMMV.

can you explain what you mean here? if I'm closing out a credit spread for profit, why would i close out just the shorts that have been profitable, and leave the longs to bleed out?

I'm not following a lot of what you wrote. can you elaborate further? (can't tell if you're trolling me)

 

[Overnight]

I'm not following a lot of what you wrote. can you elaborate further? (can't tell if you're trolling me)

Someone who takes the time to figure out how to post the up arrow like that...

"(Watch the IV↑.)

isn't trolling, heh.

 

[JSOP]

• Use of the term "supply/demand zones" marks you as already having been duped by somebody. My advice is to sit on your money until you can unlearn that garbage.

I never understood that concept. I have seen indicators, videos, articles illustrating this concept but I never understood how it works and how it can make your trades more profitable. I am glad to learn that I am not alone.

 

[spectastic]

it's areas of distribution where big money is getting in/out. you can use it to structure your trade to see whether there is continuation or reversal. it has worked for me. similar to support/resistance that day traders use. don't really know what's difficult to understand.

 

[David's faith]

The risk is stocks gapping down tremendously over night, so this strat may do well in bull markets only.

 

[qlai]

don't really know what's difficult to understand.

I think @tommcginnis meant trading options directionally is not the way to go.

Most people that I follow incorporate some sort of common sense TA in their decision making.

 

[tommcginnis]

I never understood that concept. I have seen indicators, videos, articles illustrating this concept but I never understood how it works and how it can make your trades more profitable. I am glad to learn that I am not alone.

{emphases added.}

It *doesn't* work.
It's Flat Earthers' Finance.
https://www.elitetrader.com/et/threads/online-trading-academy-secret-patent-revealed.324486/
It's a gross Frankenstein Monstrous Notion that conflates the worst of post-hocracy and (when things don't work out) ad-hocracy. (It has no predictive value, and when the Emperor is declared Naked, new shit is invented to explain the variance away.)

• "Supply/Demand 'Zones'" joins things like Pitchforks and Gann charts and the other Wavey crap, of ideas that sound so official, yet simply cannot be coded.
• For, if it's every coded, it has to beat a coin flip (at 50|50), or else quit.

NO algorithmic/systematic/quantitative trade system exists without (by definition) explicit use of "technical analysis." The difference between such systems and the utter *ocean* of bullshit out there with respect to "T/A"??? Whether you can code it; whether it does better'n 50-50; whether it MAKES MONEY.

["Is the rant over, honey?" Yes. Yes. I'm done. ]