Weekly Options Digital Guide PDF

How To Make Money Each Week Trading Weekly Options
How to Make
Money Each
Week Trading
Weekly
Options
By Joshua Belanger
Joshua Belanger Page 1

Table of Contents
Contents ......................................................................................... 2
Introduction.................................................................................... 5
What Are Weeklys? ........................................................................ 6
Difference between Monthly & Weekly Options ........................... 8
Advantages ............................................................................... 10
Disadvantages........................................................................... 11
Trading Strategies ......................................................................... 12
Buying A Call ............................................................................. 12
Buying A Put ............................................................................. 13
Selling a Call.............................................................................. 15
Selling a put .............................................................................. 16
Buying a call or put spread ....................................................... 17
Selling a call or put spread ....................................................... 18
Buying Broken Wing Butterfly .................................................. 21
Selling Iron Condor ................................................................... 24
Double Calendar Spread........................................................... 25
Double diagonal spread............................................................ 28
Call or Put Calendar Spread...................................................... 31
Call or Put Diagonal Spread ...................................................... 33

Case Studies ................................................................................. 37

Google (GOOG)......................................................................... 37
S&P 500 ETF (SPY) .................................................................... 40
Apple (AAPL)............................................................................. 41
Trading Weekly Options Tips ........................................................ 43
Conclusion ................................................................................... 45
Resources ..................................................................................... 46

COPYRIGHT: This digital guide has been found to be the work of Joshua
Belanger and OptionSIZZLE.com LLC. No part of this report may be used
for any kind of commercial purposes, or any other purpose, in any
format anywhere in the world without the express written permission of
the author.
DISCLAIMER: The information in this report is based on the experiences

and expertise of the author in conjunction with extensive research. In
accordance with new FCC regulations and government required
disclaimer, the author of this report makes no representation that any
reader may make some or any money following the information
contained herein. Any revenue or profit amounts are indicative of
experience only, and can in no way be considered a guarantee, that you
the reader may make a similar amount of money; or any money as a
result (directly or indirectly) of reading this report. Likewise, the
information in this report should never be used in place of professional
advice despite the author having extensive experience in his field. If you
have any concerns about making any form of investment in options
trading, please seek the services of a professional.
Trading options involves risk and may not be suitable for all investors.
Before deciding to invest in options, you should carefully consider your
investment objectives, level of experience, and risk appetite.
Mr. Belanger, nor any of his affiliates or associates involved in the

production of this product or his site, is a registered broker/dealer or
Investment advisor in any state or federally sanctioned jurisdiction.

Introduction
I am really excited to show you how weekly options can

enhance your trading plan and give you another valuable tool
in your trading arsenal.
I have structured the content to walk you through the basics

of weekly options. Once you understand the basics, I will
show you the best strategies for using weekly options with
real trade case studies I have done in the past.
I will share with you my thoughts behind each trade, as well

as tips and resources for you to use in future trades.
I am going to assume that you already understand what an

option is and how to execute a trade. Without a basic
understanding of options, weekly options will make no
sense.
Enough talk, let’s get right into it.

What Are Weeklys?
Weekly options have actually been around for some time, but
were only traded on cash settled indices such as the S&P 500
Index (SPX). Cash settled simply means that the option
contract is fulfilled through the payment or receipt of dollars
as opposed to the underlying instrument, such as a stock.
As of July 1, 2011 the Chicago Board of Options expanded

the instruments upon which weekly options are traded. When
weekly options first became available, there were only
twenty-eight underlying stocks, ETFs, and indices that
offered weekly options. Currently, the list has grown to
thirty-five offerings and there are likely to be more in the
future.
To find an updated list of available weeklys, you can check

out this link at the CBOE site anytime:
http://www.cboe.com/micro/weeklys/availableweeklys.aspx
The CBOE is putting limitations on the number of weekly

strikes that can be offered. The current limitation is up to
twenty strike prices with a minimum of twelve listed per
class. All strike prices listed must be within thirty percent of
the current value of the underlying index on the listing date.
This limitation is not too critical because it is based on the
demand they currently see. The CBOE doesn't want to flood

the market with every possible listing when there is not

much demand. I imagine that future strike offerings will
increase as weekly option volume increases.
While there are not as many weekly strike listings as the

monthly contracts provide, you should have no issue finding
a strike suitable for your trade.
The term weeklys is a trademarked term by the CBOE to

represent weekly options.

Difference between Monthly & Weekly Options
You should be aware of the important differences between a

monthly and weekly option. The most obvious is that weekly
options expire each week on Friday. Monthly options expire
on the Saturday following the third Friday of the month.
Weekly options do expire Friday afternoon at the market
close for underlying assets such as stocks and ETFs. The
expiration for indices is actually at the close on Thursday
with settlement on Friday morning. I know it's a little
confusing, but we are going to focus on stock and ETF
options that expire on Friday at the market close.
New weekly option contracts are available each Thursday

morning and are due to expire on the Friday of the following
week. So, weeklys have eight days to expiration, although
that is technically six market trading days.
Weekly option contracts will be marked differently than the

monthly contracts. Here is a screen shot of how they look in
my trading platform, thinkorswim:

Notice how weekly options are marked in red. Some brokers

may show it differently and some brokers don't even offer
the ability to trade weekly options yet. If your broker does
not offer weeklies, I have listed a few brokers that do at the
end of this guide under Resources.
There is one week each month when weekly options are not
available. Weekly options will not be listed when there is a
normal monthly option expiration cycle (monthly options
expire on the Saturday following the third Friday of each
month). Technically, monthly options are the same as weekly
options for the week in which they expire as they have the
same characteristics as the weekly options during that week.

Advantages
So what are the advantages that weekly options give you?

Well, there are a lot of traders who really love to trade
options on expiration week. The weeklys give that type of
trader that opportunity each week. Here are a few major
advantages:
1) If you are a buyer of options, the weekly options give you

the opportunity to pay for what you need. What I mean is
that if you are looking for either a day trade or a swing trade
for one to two days, you can buy the weekly option which
requires a lot less capital for less time than buying the
monthly option.
2) If you are a seller of options, the weekly options give you

the opportunity to sell options each week instead of one time
each month.
3) Weekly options allow traders to potentially reduce their

cost on longer term spread trades such as calendar spreads
and diagonal spreads by selling the weekly options against it.
4) Weekly options can be used by bigger traders looking to

hedge larger positions or portfolios against event risk.
5) For range bound markets, traders that like to sell

butterflies or iron condors can do so with weekly options.

Disadvantages
1) Weekly options expire quickly not allowing much time for

your trade to work.
2) If you are a seller of options, gamma is the most important

Greek to watch on the last week of trading. Gamma is a lot
more sensitive as it gets closer to expiration if prices are near
the strike you sold.
3) If you don't use proper trade size and risk management,

weeklys can blow up your account. I refer to options as
“grenades,” if you hold on to them too long, then they will
blow up. What I mean is if you get greedy and don't lock up
profits, they will drain your account with losses.
4) Implied volatility or the expected price range is going to

be higher with the weekly options versus the monthly. A
seller of weekly options holds more risk than a seller of
monthly options.
Those are the advantages and disadvantages associated with

trading weeklys. It is important to understand each. In my
opinion, with proper risk management and position sizing,
weeklys offer more advantages than disadvantages.

Trading Strategies
Since we’ve covered the basic stuff, we are going to get into
the good stuff. In this section, I am going to break down
what I think are the best strategies when trading weekly
options and when to ideally look to use them in setting up a
trade.
Buying a Call
Pretty simple, but as I mentioned in the disadvantages of

buying a call, we have a limited time to be right. Even
though we are paying a cheaper price than the monthly
option, we need to be more right on things like strike
selection, price direction, and amount of time we need. If we
are wrong, we could be sitting on a worthless option. In most
cases, I prepare for worst case scenario which means I am
looking to risk the whole premium, and based on that, I buy
the amount of contracts for my risk profile for that trade.
Ideal Trade Situation: The only way to make money when

you buy a call is when the underlying asset of that option
goes higher, which changes the price of the option. So we
need the underlying asset to move in our desired direction.

The ideal setup I am looking for when buying a weekly call

option is when the stock is on the verge of breaking out
higher. This is a technical term used to identify stocks that
are moving out of a certain trading range or pattern on a
daily time frame with a 1-2 day expectancy or a day trade
which I am looking to open and close that same day.
This is how it would look if you bought to open one weekly

call option using my platform thinkorswim:
Buying a Put
This trade is going to be like buying a call, but instead of

looking for underlying asset to go higher, you are looking for
the underlying asset to go lower to make money. Again, we
will need to be right on things such as strike selection, price
direction and the amount of time we need. If we are wrong,
then we could be sitting on a worthless option. Using the
same principle as above, when I buy a put I look for the
worst case scenario and base my trade size on the total

amount of premium paid and the amount of risk I am willing

to take.
Ideal Trade Situation: The only way to make money if you

buy a put is when the underlying asset of that option goes
lower which changes the price of the option. So we need the
underlying asset to move lower. The ideal setup I am looking
for when buying a weekly put option is when the stock is on
the verge of breaking down lower. This is a technical term
used for when stocks are moving out of a certain trading
range or pattern on daily time frame with 1-2 day expectancy
or a day trade which I am looking to open and close that
same day.
This is how it would look if you bought to open one weekly

put using my platform thinkorswim:

Selling a Call
A lot of traders like to sell calls for a number of reasons, but

this is not my style of trading. When I sell a call, I look do it
as part of a spread against another option or part of an
adjustment on a trade. When you sell a call, you are looking
to collect the premium at which you sold that call strike,
which can make you consistent returns over certain periods
of times. However, if you are wrong one month that can
really wipe out your profits. So if you are call seller, then
you must be aware of events such as earnings or potential
catalyst that can move the underlying higher.
Ideal Trade Situation: There is not much to the set up here;

the trade thesis is that the underlying asset price will not
exceed the strike price at which you sold. If that happens you
collect the premium, but if you are wrong you will be
exposed to unlimited losses. It also requires extra margin. I
prefer selling a call spread to just selling a call.
This is how it would look if you sold to open one weekly call
using my platform thinkorswim:

Selling a Put
A lot of traders like to do this trade as well and it does have a

few advantages over selling a call that I will go over in the
ideal setup. When you sell a put, you are looking for the
underlying asset to stay above the strike you sold and as long
as it does, you collect the premium. Just like selling calls,
one bad month can really wipe out your profits and hurt your
account. So, if you are a put seller, then you must be aware
of events such as earnings or potential catalysts that can
move the underlying lower.
Ideal Trade Situation: If you are looking to collect

premium and are not sure if the stock will continue trading
higher, but are certain that it will hold a key support level,
you can look to sell a put. The other setup, if you like to own
a certain underlying asset, is to sell a put to reduce your cost.
The thesis is that you like the underlying at its current price,
but instead of paying the current price, you sell the put and
collect the premium sold. If the underlying asset goes higher,
then you miss out on the potential move but still collect the
premium sold. Or, if the underlying closes below the strike

you sold, you would take delivery of the underlying and still
collect the premium sold. The only downside to the trade is
that you have to be willing to own shares which would
require you to have the money in your account to buy them.
You would start losing money if shares traded below the cost
at which you were put the underlying shares minus the
premium you collected.
Just like selling a call, this trade requires margin and I prefer
selling a put spread over selling just a put.
This is how it would look if you sold to open one weekly put
using my platform thinkorswim:
Buying a Call or Put Spread
I don't think there is really any advantage to this trade. The

theory is that you are reducing your cost more with a spread.
Like buying a call or put, you are playing for a direction.
With my strategy in buying a weekly option, there is a reason
and expected time frame in which I am looking for the
underlying asset to move. If I am right, then the reward is

much greater for me than using call or put spread. I prefer

using a call or put spread when trading monthly options.
Ideal Trade Situation: If you are looking to reduce your

cost instead of buying a put or call, you would look to use a
put or call spread to play for that direction.
This is how it would look if you bought to open a weekly

call and put spread using my platform thinkorswim:
Call Spread:
Put Spread:
Selling a Call or Put Spread

I feel that being a seller of a call or put spread has more

advantages than being a buyer of one. By being a seller of a
spread, you can understand your risk and reward more
clearly and position your trade accordingly. By selling a
spread, you are looking to collect the amount of premium
from the sale.
Ideal Trade Situation: The trade thesis here is that if you

sold a put spread, you are looking for the underlying asset
price to expire at or higher than the strike you sold. Unlike
selling a put, you are not exposed to unlimited downside and
know your risk/reward.
If you sell a call spread, you are looking for the underlying
asset price to expire at or below the strike you sold. Unlike
selling just a call or a put, you are not exposed to unlimited
risk to the upside or downside and know your risk/reward.
When I look to sell a weekly spread, my thesis changes a bit

from when I am selling a monthly spread. Since expiration is
so close, I would look to sell the call or put that is just at-the-
money or near the money, while buying a strike that is lower
depending on the how the underlying moves and the strikes
available to create the spread. This will give me, in most
cases, more return than risk. In some cases, I am looking to
collect sixty percent while risking only forty percent on the
spread. You need to make sure that in the spread you sold

that the underlying price does not start to exceed the total
premium collected.
Here is an example: Priceline.com (PCLN) is currently

trading at $388.87. If I think PCLN will close at $390 or
below five days from now, I would look to sell the
November $390/$400 call spread for $4.15
So we are risking $6.85 to collect $4.15. While I agree that

this may sound like a bad risk/reward, this trade is based on
probability. What I mean is that when you buy a call or put,
you have time ticking away to be right, and this trade is the
other side.
If we were to do this trade with five days to expiration, we

would need prices to close below $394.15 on that Friday’s

expiration to lose money. You calculate this by taking the

strike price you’re short and adding the premium collected to
that strike price ($390 + $4.15 premium = $394.15). This is
about a two percent move and is a typical daily price move
for a stock like PCLN to trade in a day. Again, the trade is
more about probability and if you are looking at a daily
chart, this could possibly be a trade looking for prices to sell
off into resistance.
This is how it would look if you sold to open one weekly call
spread using my platform, thinkorswim:
While it is not a favorite setup of mine, I would consider the

trade if I took in $5.00 to risk $5.00; or even better, took in
$6.00 while risking $4.00 on a 10 point spread.
*Also note that if the sold spread is in-the-money by one

cent, you will need to close it before the market close on
expiration Friday.
Buying a Butterfly Spread

This is a strategy for option traders who like to play direction

but like to do so with cheap debits, or even better, for a
credit. This trade can be done with a lot of the weekly
options. A butterfly spread can be bought or sold, but I prefer
buying them for close to zero cost or a small debit looking
for prices to move to a certain strike at expiration. This can
be done using calls or puts; it just depends on the direction
you think the underlying asset is going to move.
Tip: These are ideal option trades with weekly options on

stocks that are going into earnings. If you can collect a
credit, then you can still make money if you are wrong on
direction or even if it doesn't move as far as you anticipated.
The best way to typically get a credit is by moving the higher
leg of the body up one more strike to create what is called a
broken wing butterfly.
Ideal Trade Situation: When I use this strategy, I am

looking for the underlying asset price to move in a certain
direction, and to expire at a certain strike due to support and
resistance levels, which I would be short. The short strike
would be the body of the butterfly.
The first wing is the strike I would be buying to play in the

direction of where I think the underlying price will move. If
you are familiar with ratio spreads, it would be buying one
option contract and selling two option contracts higher or
lower than the strike you are long.

The second wing to complete the trade is just to protect

against losses if you are wrong. It also benefits us if the
underlying asset price exceeds the strikes we are short and
also lowers the amount of margin required.
This trade seems a little complicated at first, so let’s take a

look at an example of a regular butterfly spread.
In the next five days, I think the S&P index (SPY) will
continue to move higher, but will close around $125. Current
prices are trading at $122.72

To open this trade, this is what it would like in my platform:
If prices close at $125 we would make $89 on our $11

investment.
If we are wrong, then our max loss is $11.
This type of trade gives us a decent amount of cushion to

profit.

-------------------------------------
Selling Iron Condor
This strategy is used by a lot of option traders and is the

most popular neutral options trading strategy. Traders who
use iron condors look to collect premium each month. Since
the introduction of weekly options, traders can sell them
each week. The strategy involves selling a call spread and
put spread at the same time. Option traders who use this
strategy are looking for the underlying asset price to trade in
a range during that expiration period. Strike selection is key
in this strategy along with an understanding of current
support and resistance levels.
Ideal Trade Situation: When I look to sell an Iron Condor, I

am looking for the underlying asset to trade in a range. Since
underlying asset prices consolidate longer than they
normally move, with weekly options, I am able to profit on
this consolidation in prices. I normally look to do this on
indices or ETFs as I have found it easier to find trades there
on a consistent basis. This is not a core strategy of mine
since I look to trade direction, but I like to have other
strategies at work in my trading portfolio.

To open this trade with ten contracts, this is what it would

like in my platform:
I have an example of this trade in the case studies.
Double Calendar Spread
Double calendar spreads have been a favorite of mine when

trading stocks into earnings. The main way this type of
strategy profits is from the difference in time decay and
implied volatility decay between the shorter term option and
the longer term option. A double calendar spread involves
selling a short term call and put to create what would be a
short strangle, and buying a longer dated call and put option
at the same strike in both contracts to create a long strangle.
This trade is usually for a debit.

The reason why this type of trade is useful is because when a

big event is about to occur, such as when a company is set to
release earnings, the option market prices in what they call
an expected move in either direction as the market sees the
event as a catalyst for the underlying asset to move. This
expected move is priced into the price of the options.
Usually, the price of the option is the most expensive in the
current month of option trading.
Here is an example of how the implied volatility in the

shorter term options gets more expensive. This is Google
(GOOG) going into earnings on October 14, 2010:
The 94% represents an implied volatility of 94% compared

to 44% in the next weekly series and 32% in the monthly
contract.
In most cases, the market prices in too much of a move and

after the event happens, the rest of the premium comes out of
the options. That is why your option might not move that
much, or even worse loses money, if you bought it into an
event, even if you were right on the direction. Because the
current month option will lose value faster than the back
month that we would be long, we can profit on the difference

on the spread bought before earnings and sold after the

event.
This trade becomes profitable with a move in either

direction. Whichever way it moves, one side will start
creating profit and start to offset the cost for the other side of
the trade which will usually expire worthless.
Ideal Trade Situation: I use this type of strategy when I am

not sure of the direction of movement of the underlying asset
price, but am looking for a move. If I am biased on a
direction, I will look to play direction with a call or put
calendar spread or just a call or put spread. In the past, I
could only use this strategy during expiration week on the
monthly expiration with only stocks going into earnings on
that expiration week. Now, since the larger names such as
Google (GOOG) and Apple (AAPL) have weekly options, I
can sell the weekly options against either another weekly or
the monthly option.
Again, I am only looking for the underlying asset to move to

the strike that I sold. If they move too far beyond the strike
price, you will start to lose money. So strike selection is very
critical again and I usually look to pick my strike based on
the priced in move along with support and resistance on the
daily chart. When I trade this type of strategy, I only look to
buy into and sell right after earnings.

Tip: To figure out the priced in move, just take the price of
the at-the-money straddle and divide that by the current price
of stock. Taking Google (GOOG) as our example, prices
closed at $540.93 and the $540 straddle was priced at
$41.55, so 41/540 = 7%.
So, the market priced in a seven percent move in either

direction into earnings.
This strategy can be used to sell an at-the-money straddle

and get long an at-the-money straddle on a longer dated
contract. However, I look to pick my strike wider and will
show you an example of this type of trade in the case studies
below.
To open this trade with one contract, here is what it would

like in my platform:
Double Diagonal Spread
This strategy is pretty similar to the double calendar spread,

but the difference is that instead of the strike price being the
same in both contracts, the strike bought is usually higher or

lower than the strike sold. This strategy is also a way to play
a move in either direction. The main reason why you would
do this type of trade is to reduce the cost of buying the
double calendar spread. It is similar in concept and you
would look for a move in either direction and for that move
to offset the total amount paid and result in the other side
expiring worthless.
The type of trade is useful because like the double calendar

spread into a big event such as earnings, the option market
prices in what they call an expected move in either direction
as the event can be a catalyst for the underlying asset to
move. This expected move is priced into the price of the
options. Usually, the price of the option is the most
expensive in the current month of option trading.
The biggest issue with this strategy is that even though it

would be cheaper than doing a double calendar spread, strike
selection is very critical. With a calendar spread, you are
trading the same strike. With the diagonal spread, you are
short one strike and long another strike. If the underlying
moves past the strike you sold, then the longer dated option
you are long may not increase as you thought resulting in a
larger than expected loss.
Ideal Trade Situation: I don't look to use this strategy as

much as others. I would look at doing the double calendar
spread first. However, if I were to use this strategy, then I

would look to use it into earnings. The only reason I might

consider this strategy instead of a double calendar spread
would be if I were looking to be in the trade for a longer time
frame.
What I mean is that I use the double calendar spread for just
an overnight trade into earnings. If I traded a double
diagonal spread, my thesis would be that if the underlying
asset price moved in either direction, that the direction it
moved in would continue or breakout. I would look for the
strike sold to expire worthless or move little and the option I
am long to really increase in value. I want be long that
option for the continued move.
For me to do this trade, I would look to pay a very small

debit and for that underlying to continue to move in the
desired direction over a period of time.
Here is how it would look if you opened one contract:

Call or Put Calendar Spread
This is very similar to the double calendar spread. The only

difference is that you are only paying for one side of the
spread, and by doing that, you are choosing the direction the
underlying asset price will be going. This type of strategy is
similar to the covered call strategy, but you don't need the
same amount of capital that is needed to buy the stock.
Ideal Trade Situation: I would be looking to use this

strategy for a few different reasons.
1) Earnings: My trading system is based on following the

order flow of the options market. When I see a large amount
of calls and puts being bought and there is a clear direction
for the underlying asset using technical analysis, I look to
play that direction. Keep this in mind considering what I
went over earlier about how option prices are more
expensive going into events such as earnings.
If there is a bias in direction into an event, I would look to

play it with a calendar spread to play that direction. My
thesis is that prices will move in that direction and by
understanding how option pricing works into earnings, I can

look to sell the current weekly option and be long the longer
dated option. The trade is profitable if there is a move in that
direction due to the difference in the spread after the event.
The only issue with this trade would be if I am wrong on the

direction and prices move the other way aggressively. Then,
I would be in a losing trade. The trade could recover since I
am still long the longer dated option, but now I am in a trade
longer than I want to be tying up my money.
2) Covered Call Or Put Strategy: If I were biased in a

direction for the underlying asset price over a period of time,
then what I could do is buy a longer dated option and use the
weekly option to sell the same strike against it. This way, I
can be long or short the underlying asset with the longer
dated option, but continue to sell the weekly and use the
profits collected to reduce my cost basis and in many cases
create a zero cost trade (or even a debit and still be long the
longer dated option). The only issue would be if you sold the
weekly and prices were to expire above the strike sold, then
you would need to close out the short and long spread. But
you would look to re-open that following trading day.
This strategy has been one of the more interesting ones with
the introduction of weekly options.
Here is how a call and put calendar spread would look like
with ten contracts:

Call calendar spread
Put calendar spread
Call or Put Diagonal Spread
This is very similar to the double diagonal spread. The only

difference is that you are only paying for one side of the

spread, and in doing so, you are speculating on the direction

the underlying asset price will be moving. This type of
strategy is similar to the calendar spread, but you are not
choosing the same strike. The strikes will be different like
the double diagonal spread.
Ideal Trade Situation: I would use this strategy for a few

different reasons.
1) Earnings Trade: My trading system is based on following

the order flow of the options market. When I see a large
amount of calls and puts bought and there is a clear direction
based on technical analysis of the underlying asset, then I
would look to play that direction, considering how option
prices are more expensive going into events such as
earnings.
If there is a bias in direction into an event, then I would

normally look to play it with a calendar spread and play that
direction. But if my thesis is that prices will continue to
move in that direction, by understanding how option pricing
works into earnings, I can look to sell the weekly option and
be long the longer dated option. My trade will be profitable
if there is a move in that direction and there is a difference in
the spread after the event.

I would then look to continue to stay long the longer dated

option and continue to sell the weekly option against it to
create more profits or to reduce my cost basis.
The only issue with this trade would be if I am wrong on the

direction and price moves the other way aggressively. If that
happens, or if prices move in my direction farther than I
expected, then I would be in a losing trade.
2) Covered Call or Put Strategy: If I were biased in a

direction for the underlying asset price over a period of time,
then I would buy a longer dated option and use the weekly
option to sell the same strike against it. This way I would be
long or short the underlying asset with the longer dated
option, but continue to sell the weekly options against it to
reduce my cost and in many cases create a zero cost trade or
even a credit trade while still being long the longer dated
option. The only issue in selling the weekly against the
longer dated option would be if prices were to expire above
the strike sold. If that were to happen you would need to
close out the short option and roll into next week’s options.
The difference between this strategy and the calendar is the

cost to open the trade. The diagonal would be cheaper in
cost, but the strike selection is important.
Here is how a call and put diagonal spread would look like if
you opened ten contracts.

Call diagonal:
Put diagonal:

Now you see how using the weekly options can really
enhance your trading and create more unique trading
opportunities. I went over some of my favorite strategies that
I love using with the weekly options. My style of trading is
not for everyone and some of the other strategies outlined
might fill your needs better. I just wanted to show you and
help you understand the thinking behind each strategy. There
are a few other strategies that I have not outlined because I
feel that they are not suitable for many traders.
Case Studies
In this section, I will go over a few trades that I executed

using the weekly options along with the thought process
behind each trade.

Google (GOOG)
Date: 10 /14/2010
Strategy Used: Double Calendar Spread
Trading Event: Earnings
Closing Price before Earnings: $540.93
Closing Price after Earnings: $601.45
Time In Trade: 1 day
Cost of Trade: $1.00
Return: 500% closed call calendar side trade at $5.00 -

commissions
The Trade:
Google was due to release earnings after the close. After

taking a look at the order flow, I was not able to see a clear
bias. I knew prices would move because (GOOG) is
normally a big mover. Since I was not able to detect a bias, I
went with the double calendar spread.

I picked my strike for the trade by adding the priced-in move

to each side and charted it on the daily chart which is
highlighted in yellow below. The priced-in move of $40 in
either direction is from the example above of the double
calendar spread.
From there, I took a look at prices to see how far outside this
range they could move. I recalled what happened to (GOOG)
last earnings and figured that it had more upside than
downside. Taking a look at the upper end of prices, I saw
that there was a gap to fill and that the $590 level would
likely present a big resistance level.
You might be wondering why my strike selections are so far

out. The reason is that I was expecting shares to move. The

further I go out-of-the-money, the cheaper the trade is. Since

I was looking for a move, my job was to see how far they
might move and to pick the right strikes. As I mentioned, I
used what the market had priced-in and I charted what the
move would look like on a daily chart using support and
resistance levels.
The reason I sold the monthly options with one day to expire
against the weekly options was that I was just looking for an
overnight trade. Using the weekly option reduced my cost
over buying the monthly. The monthly options I sold had one
day to trade while the weekly options had eight days.
This trade was successful and created a big percentage

winner overnight.
Here is what the trade looks like:
(Note that it says double diagonal, but it is a calendar).

There seems to be an error in the system when using weekly
options.)

S&P 500 ETF (SPY)
Date: 9/16/2010
Strategy Used: Iron Condor
Trading Event: None
Closing Price on Entered Trade: $113.05
Closing Price at Expiration: $114.82
Time in Trade: 7 Days
Cost of Trade: credit of $0.50
Return: 100% or the total premium sold less commission.
The Trade:
The market was slowly grinding higher after just seeing an

aggressive move off the recent lows of about eight points.
My thesis was that the upside was pretty limited during the

next seven days and there was more of a chance for a pull
back. Likely, there would be buyers of the dip. That is why I
went with the $110/$108 put spread. I was putting myself at
risk of losing $1.50 to make .50 cents, but it was more of a
probability trade that we continued to trade in a range. As
you can see, that is exactly what happened.
Here is what the trade looked like:
Apple (AAPL)
Date: 7/20/2010
Strategy Used: Calendar Spread
Trading Event: Earnings
Closing Price before Earnings: $251.89
Closing Price after Earnings: $254.24
Time in Trade: 1 day
Cost of Trade: $3.51

Return: 50% closed spread at $5.00
The Trade:
Shares of (AAPL) had been trading bullishly and there was a

lot of hype around shares. Looking at the chart, I saw a slight
bullish triangle forming. However, looking at current
resistance levels, I thought there would be some selling at
that level due to the uncertainty in the general market at the
time with so much focus centered on the BP oil spill.
Taking a look at the option order flow, I felt that there was
enough of a bullish bias leaning into earnings to warrant a
bullish trade. I went with the $270 strike and went with what
the market was pricing in for an expected move. Shares
moved higher and ended up closing up $3 on the day.
Here is what the trade looked like:

Trading Weekly Options Tips
Here are some tips that will help you when you approach
trading weekly options:
1) Always use limit orders on your trades. Market makers are

always looking for suckers and when you don't use a limit
order, they will make you pay a higher price than you
should.
2) When day trading weekly options or any option, it is best

to use penny wide spreads. With most options, you will find
them to be $0.50 wide, which on a $0.50 option puts you at a
10% disadvantage. Many don't understand this concept, but
you must know your edge and how much you are giving up
to the market makers.
3) When I trade earning trades, I only risk 1% of my

portfolio. That means on a $10,000 portfolio I only risk $100
in a trade. Even if that means I can only purchase one
contract, I am fine with that. If I can't, I will look for another
trade.
4) When trading weekly options, time and price are of

utmost importance. Unlike stocks, there is a ticking time

bomb associated with options which is that options expire.

You must be certain on your timing and strike selection. If
you are wrong, you need to close your trade and take the
loss. If you don't, then you could be sitting a worthless
option.
5) Paper trade these strategies first. Then, slowly put real

money on the line once you become successful and confident
with your paper trading. Many are so eager to start putting
real money on the line and want to learn the hard way. Being
successful in trading takes TIME! Time can be your friend
and your enemy. So take it slowly, understand the strategies
you’ve learned, as well as how they work and in which
situations they work. Only then, start taking slow steps in
risking real money. It will be a lot different from paper
trading since now emotions will be involved and real market
price fills. This advice is very critical because it will build up
confidence. Confidence is so necessary not only in trading,
but for anything you do in life.
The best options paper trading account is Trademonster.

Conclusion
There you go. I hope you can see and understand how
weekly options can really add to your trading arsenal. As I
mentioned, please start out paper trading these strategies
first. There is no rush to start trading these strategies if you
don't understand them. There will always be an opportunity
out there.
I have outlined some of my favorite strategies that I love to

use and provided some others that I think are the best when
approaching weekly options. The strategies will not always
work and/or you might pick the wrong strike. There is not
much you can do about that because that is part of trading.
What you are looking to do is find the best risk/reward set-
ups.
When you’re right, you will make good money. When you
are wrong, with proper risk management and position size,
you won't break your account. Being wrong is a part of
trading and you just have to keep taking your shots.
Trade well and enjoy your journey,

Joshua Belanger
Resources
TradeMONSTER offers some great tools for option traders. They

also offer 30 days of commission-FREE trading and then $0.50 per
contract on new accounts with tradeMONSTER. (At least open a
paper trading account to use those tools to help you learn.)
SureTrader is starting to become my favorite broker. The reason is

that for accounts under 25k, you can get past the PDT rule and
trade as much as you want. SureTrader
You can find my best trades at http://www.optionsizzle.com/elite/
Discover how to make 5-8% in less than 15 minutes each week at
http://www.spxoptionstradingcourse.com
I challenged 10 of the top options traders I know to tell me their

secrets to being successful in options trading. Listen in at
http://www.optiontraderinterviews.com
If you would like to get in touch with me about anything you have
watched or learned through my site, you can do so here.

Weekly Options Digital Guide PDF

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Weekly Options Digital Guide PDF

Caricato da

Copyright:

Formati disponibili

How To Make Money Each Week Trading Weekly Options

Joshua Belanger Page 1

Joshua Belanger Page 2

Case Studies ................................................................................. 37

Joshua Belanger Page 3

DISCLAIMER: The information in this report is based on the experiences

Mr. Belanger, nor any of his affiliates or associates involved in the

Joshua Belanger Page 4

I am really excited to show you how weekly options can

I have structured the content to walk you through the basics

I will share with you my thoughts behind each trade, as well

I am going to assume that you already understand what an

Enough talk, let’s get right into it.

Joshua Belanger Page 5

What Are Weeklys?

As of July 1, 2011 the Chicago Board of Options expanded

To find an updated list of available weeklys, you can check

The CBOE is putting limitations on the number of weekly

Joshua Belanger Page 6

the market with every possible listing when there is not

While there are not as many weekly strike listings as the

The term weeklys is a trademarked term by the CBOE to

Joshua Belanger Page 7

Difference between Monthly & Weekly Options

You should be aware of the important differences between a

New weekly option contracts are available each Thursday

Weekly option contracts will be marked differently than the

Joshua Belanger Page 8

Notice how weekly options are marked in red. Some brokers

Joshua Belanger Page 9

So what are the advantages that weekly options give you?

1) If you are a buyer of options, the weekly options give you

2) If you are a seller of options, the weekly options give you

3) Weekly options allow traders to potentially reduce their

4) Weekly options can be used by bigger traders looking to

5) For range bound markets, traders that like to sell

Joshua Belanger Page 10

1) Weekly options expire quickly not allowing much time for

2) If you are a seller of options, gamma is the most important

3) If you don't use proper trade size and risk management,

4) Implied volatility or the expected price range is going to

Those are the advantages and disadvantages associated with

Joshua Belanger Page 11

Pretty simple, but as I mentioned in the disadvantages of

Ideal Trade Situation: The only way to make money when

Joshua Belanger Page 12

The ideal setup I am looking for when buying a weekly call

This is how it would look if you bought to open one weekly

This trade is going to be like buying a call, but instead of

Joshua Belanger Page 13

amount of premium paid and the amount of risk I am willing

Ideal Trade Situation: The only way to make money if you

This is how it would look if you bought to open one weekly

Joshua Belanger Page 14

A lot of traders like to sell calls for a number of reasons, but

Ideal Trade Situation: There is not much to the set up here;

Joshua Belanger Page 15

A lot of traders like to do this trade as well and it does have a

Ideal Trade Situation: If you are looking to collect

Joshua Belanger Page 16

Buying a Call or Put Spread

I don't think there is really any advantage to this trade. The

Joshua Belanger Page 17