The Rise Of Weekly Options

The most recent statistics from CBOE Holdings demonstrate the increasing popularity of short-term weekly options. Weekly options were first introduced by the CBOE in 2005, 32 years after the introduction of the first monthly options.

In the past 10 years, the popularity of “weeklies” has taken off, but why are they so popular and what does their popularity say about the modern investment world?

The Numbers

According to a new CBOE infographic, 271 million weekly options contracts were traded in Q1 2015, a 9 percent quarterly increase. In addition, weekly options accounted for 27 percent of total option trading volume in Q1, up from only 23 percent in Q1 2014.

Why Are Weeklies So Popular?

Matt Moran, Vice President of CBOE Institutional Marketing, commented about what’s behind the exploding popularity of weekly options. According to Moran, weekly options provide a greater level of flexibility when it comes to trading market events, such as government reports and monetary policy announcements.

“Volume in SPX Weekly options grew at the end of June amid heightened concerns about international events, including the Greek debt crisis,” Moran explained. “Option buyers note that the differences in implied volatilities for one-week options and one-month options can be significant,” he added.

Leav Graves, founder of Option Samurai, said that one key advantage of weekly options is they provide a larger selection of expiration dates for traders to choose from during earnings season.

“If I don’t like to hold a position during earnings, I can choose a weekly expiration date before the company’s earnings date – something that I was not necessarily able to do before when I only could choose the third Friday of each month,” he explained.

The Modern Trader

When asked what the rise of weekly options says about modern traders, Graves revealed it is yet another indication that traders are not intimidated by more complex, non-traditional financial instruments. Traders are now more willing than ever to take investment fate into their own hands.

From 2013 to 2015, the number of optionable stocks has risen by 12.3 percent, but the number of option contracts has risen by 63.8 percent.

Weekly options offer increased flexibility for the active trader. Traders are able to fine tune their strategies to specific times and events.

Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.

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