weekly options

O

osho67

Does anybody have experience in trading weekly options?These are offered by CBOE (SPX, XSP, OEX, XEO) and by EUREX (DAX and ESTX50)

Are there any drawbacks or limitations to these type of options. These days margin requirement is very high but by using weekly options you can use available funds more efficiently. Is this possible?

Comments much appreciated. Thanks
 
These are normal options in the final week before expiration. Time decay and gamma are the key points here.
 
Quote from osho67:

Does anybody have experience in trading weekly options?These are offered by CBOE (SPX, XSP, OEX, XEO) and by EUREX (DAX and ESTX50)

Are there any drawbacks or limitations to these type of options. These days margin requirement is very high but by using weekly options you can use available funds more efficiently. Is this possible?

Comments much appreciated. Thanks
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I never traded them, but looked at them for possibilities. I found the markets to be too wide and the open interest to be too low.

But, you should give it a try. One thing for sure - you will not be tied up in the position for too long. If you are a premium seller, as you have already be warned, negative gamma is fierce when expiration is nigh.

Just trade a few lots - to see how it works.

Mark
 
Thanks Mark and MTE

I have paper traded weekly option which expires this friday. I will do so for few weeks . The reason why I am looking at these options is my premium income has fallen because IB has increased margin rates considerably. Is this your experience as well? You might not have experienced this fall in income either because of the product (RUT) or because of the broker you use.

I would like to find out more about the end of month expiry options as well. I think ES offers end of month as well.

Any information much appreciated. Thanks
 
Quote from osho67:

Thanks Mark and MTE
The reason why I am looking at these options is my premium income has fallen because IB has increased margin rates considerably.
More...

Please do not take desparate actions to find a way to make more money.

Weeklies do have the best theta, but you must not ignore risk and that negative gamma can be a killer.

Mark
 
Quote from dagnyt:

Please do not take desparate actions to find a way to make more money.

Weeklies do have the best theta, but you must not ignore risk and that negative gamma can be a killer.

Mark
More...

thanks Mark. You are absolutely correct. I realised weeklies have to be treated as futures. You donot wait to take losses. Small losses but more gains could be the way.

Mark, I donot much understand Greeks. Is it possible you can give simple explation in simple English as to how to use them. Have you touched this subject in your blogs?

Thanks
 
Quote from osho67:

Mark, I do not much understand Greeks. Is it possible you can give simple explanation in simple English as to how to use them. Have you touched this subject in your blogs?

Thanks
More...

You use the greeks to estimate how the price of an option is going to change if certain things happen. Thus, you estimate potential profit/loss.

There's not much on this topic in the blog. Perhaps I can do something about that.

Each greek letter is used to describe the <i>sensitivity</i> of the price of an option when the price of the underlying asset changes

For example, delta measures the sensitivity (rate at which the option price changes) of the option price when the price of the stock (or index) moves by one point.

If delta is 0.28 and the index moves by 1 point, you anticipate that the option's price will change by 28 cents.

Delta is not constant and gamma measures the rate at which delta changes - again for a one point move in the stock.

Similarly,

Theta is a measure (these are all estimates - in the real world, none of this happens exactly as expected) how the value changes when one calendar day passes.

Vega measures how the price of an option changes when the implied volatility changes by one point.

Hope this helps

Mark
The Rookie's Guide to Options
 
Quote from osho67:

Does anybody have experience in trading weekly options?These are offered by CBOE (SPX, XSP, OEX, XEO) and by EUREX (DAX and ESTX50)

Are there any drawbacks or limitations to these type of options. These days margin requirement is very high but by using weekly options you can use available funds more efficiently. Is this possible?

Comments much appreciated. Thanks
More...

Ignore the above Weekly options. If you want to trade Weekly options you should look at the AEX-index options in The Netherlands. The liquidity is much bigger compared with above symbols. Even the Daily options are heavily traded on our Exchange.

Good Luck
 
Quote from DutchMan:

Ignore the above Weekly options. If you want to trade Weekly options you should look at the AEX-index options in The Netherlands. The liquidity is much bigger compared with above symbols. Even the Daily options are heavily traded on our Exchange.

Good Luck
More...

Thanks for your input. I will try to find out more. Why is there so much volume or volatility in AEX index options?
Plese give link to the exchange if you have. I will do search on google as well. I am in UK and what will be the time difference ?

This opens up a new possibility for me.
 
Quote from osho67:

Thanks for your input. I will try to find out more. Why is there so much volume or volatility in AEX index options?
Plese give link to the exchange if you have. I will do search on google as well. I am in UK and what will be the time difference ?

This opens up a new possibility for me.
More...

The exchange is Euronext and the time zone is CET or Central European Time, which is 1 hour ahead of London.
 
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