Learning how to start trading weekly options begins with understanding that short-dated options behave differently from longer-term contracts. Weekly options can give traders a way to take positions on short-term price movements, earnings announcements, economic events, technical breakouts, and other near-term market developments, but their short lifespan also means time decay can become a major factor very quickly.
A weekly option may have only a few trading days remaining before expiration. This gives the underlying stock, ETF, or index less time to move in the expected direction. As a result, weekly options can experience large percentage changes in value over relatively short periods.
Before placing a weekly options trade, beginners should understand calls, puts, strike prices, premiums, expiration dates, implied volatility, time decay, liquidity, and position sizing. The goal should not simply be to find an inexpensive option. It should be to select a contract that provides a reasonable way to express a specific market view while keeping risk controlled.
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Beginners should be advised that if they lack experience and knowledge, it is best for them to start with a demo account and the resources in the Trading academy where they can gain the necessary skills for a real account.
What Are Weekly Options?
Weekly options are short-dated options contracts that expire on a weekly schedule.
They use the same basic structure as other options:
- An underlying asset
- A call or put
- A strike price
- An expiration date
- An option premium
Their main distinguishing feature is the limited time remaining before expiration.
For example, a trader on Monday might choose an option that expires on Friday. Another trader could choose a longer-dated monthly option that has several weeks remaining.
The weekly contract provides more concentrated short-term exposure, while the longer-dated option gives the market more time to move.
Understand Calls And Puts First
Before trading weekly options, beginners should understand the difference between calls and puts.
Weekly Call Options
A call option generally becomes more valuable when the underlying market rises, although other factors such as volatility and time decay also affect its price.
A trader might consider a weekly call when expecting a stock or index to rise over the next several trading sessions.
Weekly Put Options
A put option generally becomes more valuable when the underlying market falls.
A trader might consider a weekly put when expecting a short-term decline.
However, buying a call does not guarantee a profit simply because the underlying asset rises slightly, and buying a put does not automatically produce a profit after a small decline.
The size and timing of the movement matter.
Step 1: Learn How Option Premiums Work
The option premium is the price of the contract.
Several factors can influence weekly option premiums:
- Current underlying asset price
- Strike price
- Time remaining until expiration
- Implied volatility
- Market liquidity
- Supply and demand
Weekly options often have lower absolute premiums than comparable options with much longer expirations because they contain less time value.
This can make them appear attractive to beginners.
However, a lower premium does not necessarily mean lower risk.
An option purchased for a relatively small amount can still lose 100% of the premium paid.
Step 2: Understand Time Decay
Time decay is one of the most important concepts in weekly options trading.
Options lose time value as expiration approaches. This effect is commonly associated with theta.
Weekly options have very little time available, so time decay can become especially noticeable.
Suppose you buy a weekly call on Monday because you expect a stock to rise.
The stock remains flat on Tuesday.
It remains flat again on Wednesday.
Even though the stock has not fallen substantially, your option could still lose value because there are fewer remaining opportunities for the expected move to occur.
This creates one of the biggest challenges of weekly options:
You need to consider both direction and timing.
Being correct eventually may not be enough.
Step 3: Choose An Underlying Market You Understand
Beginners should avoid selecting weekly options simply because they are moving rapidly.
Start with an underlying stock, ETF, or index you already follow.
You should understand:
- What typically moves the market
- Normal daily volatility
- Important support and resistance levels
- Upcoming economic events
- Earnings dates where applicable
- Recent price trends
A trader who understands the underlying market is in a better position to evaluate whether an options contract offers a sensible opportunity.
Options analysis should start with the underlying asset, not the option chain.
Step 4: Define Your Market View
Before looking at strike prices, decide exactly what you expect to happen.
For example:
- The stock may break above resistance.
- An index may continue its current trend.
- A company may react strongly after earnings.
- A market may fall after an economic announcement.
- A stock may remain within a defined trading range.
Your thesis should include a timeframe.
Saying “I think this stock will eventually rise” is not enough for a weekly option.
A better thesis would be:
I expect the stock to break above resistance within the next three trading sessions.
That timing requirement is crucial.
Step 5: Select The Expiration Carefully
Do not automatically choose the nearest expiration.
The option needs enough time for your market thesis to develop.
Imagine you expect a stock to rise after an announcement scheduled for Thursday.
An option expiring Friday leaves very little time after the event.
A later expiration may provide more flexibility, although it will typically contain additional time value and could cost more.
Consider:
- When you expect the move to begin.
- How long the move may take.
- Whether any important events occur before expiration.
- How quickly time decay may affect the contract.
Selecting an expiration is part of risk management.
Step 6: Choose A Strike Price
Weekly options may be available at many strike prices.
Suppose a stock trades at $100.
Calls might be available at:
- $95
- $100
- $105
- $110
The $110 call may look much cheaper than the $100 call.
However, the underlying stock has farther to travel before the $110 strike becomes favorable.
Weekly options that are far out of the money can lose value extremely quickly because there is little time remaining for a large move.
Beginners should avoid assuming the cheapest strike offers the best opportunity.
Compare the premium with the probability and size of the movement required.
Step 7: Check Implied Volatility
Implied volatility reflects the amount of future movement being priced into options.
It often rises before significant events such as:
- Earnings reports
- Central-bank decisions
- Major economic releases
- Important company announcements
Higher implied volatility can increase option premiums.
Suppose you buy a weekly call immediately before earnings because you expect the stock to rise.
The stock does rise after the announcement, but only modestly.
At the same time, implied volatility collapses because the uncertainty surrounding earnings has disappeared.
The option could perform worse than expected even though you predicted the direction correctly.
This phenomenon is commonly known as IV crush.
Always ask whether you are paying an unusually high premium for an anticipated event.
Step 8: Check Liquidity And Bid-Ask Spreads
Liquidity is important in options trading.
Actively traded options typically have tighter bid-ask spreads than less liquid contracts.
Suppose an option shows:
- Bid: $1.00
- Ask: $1.05
The spread is relatively narrow.
Another option might show:
- Bid: $0.70
- Ask: $1.10
That much wider spread can make entering and exiting more expensive.
Before trading weekly options, check:
- Bid price
- Ask price
- Trading volume
- Open interest
- Spread width
A low-priced option is not necessarily attractive if poor liquidity makes execution difficult.
Step 9: Decide How Much To Risk
Position sizing is particularly important with weekly options because premiums can move rapidly.
Before entering, determine the maximum amount you are willing to lose.
For purchased calls and puts, you should be prepared for the possibility of losing the entire premium paid.
For example, suppose your trading plan allows a maximum loss of $100 on a particular setup.
Do not buy $500 worth of weekly options simply because you believe strongly in the trade.
Confidence does not reduce market risk.
Position size should be based on predefined account risk rather than conviction.
Step 10: Plan Your Entry And Exit
Every weekly options trade should have an exit plan before entry.
Decide:
- What price action confirms the setup?
- What invalidates the trade?
- When will you take profit?
- Will you close before expiration?
- Will you hold through a scheduled event?
- What happens if the underlying remains flat?
Because weekly options lose time rapidly, “waiting and hoping” can be especially costly.
A trade that is not behaving as expected may continue losing value even if the underlying market simply moves sideways.
A Simple Weekly Options Trading Example
Imagine a stock trades at $75.
Technical analysis shows resistance at $77.
You believe that a breakout above $77 could lead to a short-term rally.
Rather than immediately buying a weekly call, you create a plan:
- Wait for the stock to break above $77.
- Confirm that trading volume increases.
- Review the weekly options chain.
- Choose a strike close to the current market rather than an extreme out-of-the-money option.
- Check the bid-ask spread and implied volatility.
- Limit the amount of premium at risk.
- Define an exit level if the breakout fails.
The stock breaks above $77 and reaches $80.
The weekly call may increase in value.
However, if the stock fails at $77 and falls back toward $74, the option could lose value quickly.
The trade therefore depends on more than simply choosing a call. Entry timing, strike selection, volatility, expiration, and risk control all matter.
Trading Weekly Options Around Earnings
Weekly options are frequently associated with earnings trading because their expiration dates can closely match company announcements.
Suppose a company reports earnings on Wednesday evening.
A trader might consider options expiring later that week.
However, earnings options often contain elevated implied volatility because traders already expect a large move.
There are several possible outcomes:
- The stock moves sharply in the expected direction.
- The stock moves sharply in the opposite direction.
- The stock barely moves.
- The stock moves correctly, but not enough to overcome the drop in implied volatility.
This makes earnings trading particularly challenging.
Beginners should not assume that correctly predicting whether a company beats earnings expectations automatically means the corresponding options position will be profitable.
Weekly Options Vs Monthly Options For Beginners
Weekly options offer lower-duration exposure but less time for a trade to work.
Monthly options generally offer:
- More time before expiration
- Slower immediate time decay
- More flexibility if timing is uncertain
- Higher premiums in many comparable situations
Weekly options generally offer:
- Shorter exposure
- Faster time decay
- Lower absolute premiums in many cases
- Greater sensitivity to near-term movements
Beginners sometimes choose weekly options because they appear cheaper.
A more useful question is whether the chosen expiration matches the timeframe of the trade.
Common Weekly Options Trading Mistakes
Buying The Cheapest Option
Deep out-of-the-money weekly options may be inexpensive because the probability of a sufficiently large move before expiration is relatively low.
Ignoring Time Decay
A sideways market can be damaging to a short-dated option buyer.
Trading Too Large
Small premiums can encourage traders to buy many contracts.
This can turn a seemingly inexpensive trade into a significant account risk.
Ignoring Implied Volatility
Buying options when volatility is extremely elevated can create poor risk-to-reward conditions.
Trading Without An Exit Plan
Weekly options can lose value rapidly, leaving little time to make decisions after the trade goes wrong.
Holding Until Expiration Automatically
There is no requirement to hold a position until expiration simply because it is a weekly option.
Have a reason for remaining in the trade.
Troubleshooting Weekly Options Trades
Why Is My Call Losing Money Even Though The Stock Rose?
The stock may not have risen enough, time decay may have reduced the premium, or implied volatility may have declined.
Why Did My Option Lose Value Overnight?
Time continues to pass, and new information can change volatility expectations.
Why Is My Option Moving More Than The Stock?
Options provide nonlinear exposure. Short-dated options can become highly sensitive to small underlying movements, particularly near expiration.
Why Is The Spread So Wide?
The contract may have limited liquidity.
Consider whether another strike or expiration has better trading activity.
Why Did My Option Expire Worthless?
The underlying market did not finish in a position that gave the option sufficient value under its contract terms.
Best Practices For New Weekly Options Traders
A disciplined beginner can reduce avoidable mistakes by following several principles:
- Learn standard options terminology first.
- Understand the underlying market.
- Start with clearly defined setups.
- Choose expiration based on your expected timeframe.
- Avoid selecting strikes solely because they are cheap.
- Check implied volatility before trading.
- Monitor bid-ask spreads and liquidity.
- Keep position sizes small.
- Assume the entire premium can potentially be lost.
- Create an exit plan before entering.
- Review each trade afterward.
A demo or simulated environment can also help traders become familiar with how weekly option premiums behave without immediately putting significant capital at risk.
Important Weekly Options Risk Warning
Weekly options are complex financial products and can produce substantial losses very quickly.
Buyers of weekly calls and puts can lose the entire premium paid if the underlying market does not move sufficiently before expiration. Because weekly options have little time remaining, time decay can accelerate rapidly. Changes in volatility can also cause large option-price movements even when the underlying asset moves in the direction expected.
Options sellers can face different and potentially much greater risks. Depending on the strategy, uncovered short-option positions may involve substantial or theoretically unlimited losses.
Options CFDs carry additional risk because they are leveraged products. Leverage magnifies both favorable and unfavorable market movements, meaning losses can develop quickly relative to the capital committed. Margin requirements, spreads, financing costs, volatility, and rapid market movements can all affect results.
Weekly options and leveraged options products are not suitable for everyone. Traders should fully understand the contract structure and maximum potential loss before trading and should never risk money they cannot afford to lose.
Conclusion
Starting to trade weekly options requires more preparation than simply deciding whether a stock will rise or fall.
Weekly options combine short expiration periods with calls, puts, strike prices, premiums, time decay, implied volatility, and liquidity. Because there is little time for a trade to develop, mistakes involving timing or strike selection can become expensive quickly.
A structured approach begins with understanding the underlying market, developing a clear short-term thesis, choosing an appropriate expiration and strike, checking implied volatility and liquidity, and calculating the maximum acceptable loss before entering.
Beginners should focus on learning how weekly options behave rather than trying to maximize the number of trades. Short-dated contracts can provide flexible exposure to near-term market movements, but that flexibility comes with significant risk.
Explore different options expirations, compare weekly contracts with longer-dated alternatives, and practice evaluating strikes, premiums, volatility, and risk before committing significant capital.
I’m a self-confessed Forex geek who spends countless hours researching, testing, and reviewing everything related to trading. With many years of experience in the Forex industry—and thousands of robots, brokers, strategies, and courses put to the test—I’ve seen what works and what doesn’t. My goal is simple: to share that knowledge with you for free, so you can navigate the exciting (and sometimes crazy) world of Forex trading with more confidence.
