In this video I am running through the analysis of several different stocks to initiate a weekly spread trade.
This came from a new subscriber named Richard, who asked me about selling puts on a weekly basis. If you’ve been following selling puts for income very long, then you know that over the past year or so, I have focused much more on monthly trades rather than weekly trades.
And as you go through the video, you will see how some the issues come up with weekly trades that really give an edge to the monthlies. Basically it comes down to the fact that in a weekly option you have very little time value to sell. As a result of that, you have to get much closer to the current market price in order to generate any kind of you.
On top of that, you have to take into account that the lower yields you’ll get on a weekly trade means you have to trade in larger volume, and thus have higher commissions.
All of these factors are arguments against selling weekly options.
However, there are definitely benefits. If you pick your options correctly, you can make much higher returns. If you are a successful weekly trader, you can easily expect to make 50% per year on your working capital. Compared to my monthly Condor trades, I only make about 30 to 35% on my working capital.
But the trade-off is the amount of work you’ve put into it, and how much time and energy to spend monitoring the positions. I love the monthly Condor trades because I only glance at them once or twice a week. And that fits better with my personality.
Regardless, it is good to know both sides of any issue, so go ahead and watch the video to see all the steps involved with selecting the right trade. Leave a comment on the YouTube video so that everybody can engage in the conversation.