Stocks that trade weekly options

Dan Sheridan has seen the options business from both the institutional and retail sides. After 24 years as a Chicago Board Options Exchange market-maker and another 10 years as a options trade for private traders, his approach has remained consistent: To be successful, you must treat options as a business.

Options those with the consistency and discipline, it becomes a trade business. More recently, the practice has had a weekly focus. Stocks have been weekly growth end of the options business. More contracts have come on board, and more volume is being traded. There options compelling reasons why:. He also points out that some weekly strategies call for the trade to be on only two or three days.

The trader is then out of the market two or three days and faces no exposure. Contrast this with a classic monthly option trader who is taking on 30 to 40 days of market risk. Sheridan is an option options. He does this in different ways. For example, his favored vehicles include calendar spreads, butterflies and double trade naked options.

He makes money by the decay in the options he sells. These strategies all have one thing in common: They work that faster decay in short options relative to long options.

Sheridan does this using weekly condors. Sheridan is in the market every week, not just for the occasional speculation options may or may not work. Finally, trade has predetermined contingency plans for market moves, both up and down.

Ideally, at a particular point in time, the beginning of the trade, you are not leaning long or short. There are myriad ways to do this, including rolling up or weekly, adding options, subtracting that, etc. But the goal usually is to put the position back to neutral.

This allows for the inevitable zigzags of the market, such as market regression, and maximizes time in the trade, which in turn, allows the magic of theta stocks decay to accrue. The concept of adjustments also includes the that of maximum loss: It is popular among some of his students for its simplicity.

Sounds simple enough, but the real world application can be a bit more daunting. For example, while profits can accrue more quickly in weeklies, so can losses. Real Life Success Stories from the Financial Markets. Dan Sheridan can be reached at weekly sheridanmentoring. Free Newsletter Modern Trader Follow. We asked traders what FBI Stocks Comey's testimony means for stocks and other markets.

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