Weekly Options, or commonly called “Weeklies”, are options that trade for about one week.

New Weeklies are listed each Thursday or Friday and expire the following Thursday or Friday except the third week of the month because that is when the regular monthly options have only one week left to expiration.

Except for the shorter duration, Weeklies generally have the same contract specifications and offer the same continuous, two-sided quotes as standard options.

History of Weekly Options

October 2005 – Weekly Options, first introduced by the Chicago Board Options Exchange (CBOE), the largest U.S. options market, which are one-week options as opposed to traditional options that have a life of months or years before expiration.

These Weeklies are based on the index options: SPX, XSP, OEX, and XEO. These are cash-settled options.

As of June 04, 2010, the Chicago Board Options Exchange (CBOE) announced that it will begin trading new Weekly Options on four exchange traded [...]

In this month’s (September 2012) SmartMoney magazine, they ran an article about normal people who are trying to make their fortunes by trading. It kinda reminded me of the Tech Bubble when every article was about normal Joes making a killing day trading, and the housing bubble when everyone and their mother was out there flipping houses.

One of the profiles caught my eye. The guy’s name is Patrick, 43, and he used to work at Washington Mutual until he got laid off. So he moved back in with his parents to save money and spent a year learning how to sell options. After numerous courses and seminars, he decided to focus on iron Condors and spent 6 months trading condors in a small account.

All of this is great. He seems serious and really wants to learn to trade. More power to him.

What pissed me off was the fact that he just got licensed as a Registered Investment Advisor (RIA) and wants people to give him money so he can trade condors for them.

Say What?

This guy, who at 43, lives with his parents, has less than $100k to his name, hasn’t been trading for more than a couple years, wants others to let him trade for them?

Could this be the problem with the financial management industry? That people with no experience, no track record, and who frankly do not even know what they claim to know get to gamble with other peoples’ money.

Sheesh. This guy’s trading makes him so stressed out that he had to take up boxing to relief the stress. He can’t even discuss what he does with his parents because it freaks them out. He gets up at 2 am to watch what the European markets are doing. Oh, and he meets potential investors at Starbucks because of course the only alternative is to have them come to his childhood bedroom.

Hey Patrick, how about you:

1. Make enough from your own trading to pay your own bills.
2. Trade well enough to beat the markets for at least 5 years
3. Stop mooching off your parents

And after all that, then you try to do the same with someone else’s money. Because in the beginning who is going to give you money to manage besides your friends and family? And once you lose their money, you are going to need a lot more than boxing lessons to relive the stress. Or maybe the boxing lessons are for self defense incase angry investors hunt you down after you lose their money.

So you want to trade weekly options?

Never mind that they are most risky than monthly options. But the quick money and high returns are sometimes too hard to resist.

Ok then, here is a trade setup I use. When these conditions are met I trade credit spreads. More details are in the video. And in the members area, I added a video of me looking for, analyzing, and putting on a live trade with real money using this setup.

Happy Thanksgiving!

Hope you have a wonderful, happy, and well rested holiday!

Here is an update of the MCD and JNJ butterfly trades I showed you in my last video. Had to make an adjustment to each because of the strong down move in the market which also affected these stocks.

This is Lesson 3 in our 5 Part video series on Iron Condor Trading

Where do you start when you want to start trading stocks and covered calls?

That is the topic is this video. In it I go over how to get started, how to calculate how much money you need to get started, what you can make, and some simple guidelines I wish I knew when I got started.

Here is a pretty good video of a segment done by Jim Cramer in which he talks about what to invest in inside your retirement accounts.

Now it is possible to sell options inside your IRA and many people do. I do not recommend it for the most part. Why?

Because it is still more riskly than just owning a bunch of boring dividend paying stocks. If you are an OptionGenius member you can see how I invest my own funds and the allocation. But in my retirement accounts, I am mainly invested in stocks. I do sell covered calls and sometimes some puts, and the occasional credit spread/condor/ or butterfly. But those are the exception.

I use my normal trading accounts for the bulk of my option selling trades.  Several reasons.

1. I like to take the gains out to live on and enjoy. Can’t take your profits out of an IRA and [...]

Why is this trade showing a loss?

That is the question a member asked me today. His question has to do with why a credit spread is showing a loss when the stock is still above the short strike.  Valid question, and one that I get asked a lot by newbies. Here is the question, the answer, a follow up question, and a basketball example. The question is in blue, and my response is in red.

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Now I need to be educated a bit.  I have a question about the very last trade that you placed on April 28th, where you sold 4 May 1310 puts and bought 4 May 1305 puts.  The SPX was at 1355.77 when you placed the trade so I am assuming (perhaps wrongly) that the goal is for it to stay above 1310 and if so we keep the full credit. exactly  
 
I paper traded this along with [...]

Q:  Dear Allen,

I am pretty new to the option trading and that’s why have to ask this very basic question.
You are sometimes coming with a recommendation  “Will have to hold to expiration”. I would like to get better understanding of the processes that happen at the expiration day.  Could you please explain it briefly or refer me to the right place where I could find this information ?

Thank you

A: On expiration we look for the closing price. This is normally the close of the day for most options, or it can be close to the opening price for index options (the final settlement price for index options is complicated). If you sold an option you know if you want the price to be above or below the closing price.
 
So if you sold a 50 strike naked put, you want the price to close above 50. If it does, the option expires [...]

OptionGenius is pleased to announce that we have added two more brokers to our autotrading program.

Trademonster and Interactive Brokers.

Trademonster is a newer broker but is focused on customer service and growing their customer base by providing lots of trading tools, resources, and education.

Interactive Brokers is a larger broker used by major market players.

OptionGenius members can sign up to autotrade our service through these brokers right away. If you already have an OptionGenius membership just choose a broker and visit their autotrade page for more info on how to set up.

Note: to autotrade with Interactive Brokers, you have to go through a separate company called Global Autotrading. This company charges a monthly fee for autotrading. OptionGenius does not charge any money – it is a free service for our members.

Our other autotrade partners are still doing great for our members.

Eoption and OptionsXpress.

For more information on what Autotrade is and how it [...]