The best option trading strategy for weekly expiry will depend on your individual trading style and risk tolerance. However, some popular strategies include:
- Bull call spread: This strategy is used when you believe that the underlying stock is likely to go up in price. You buy a call option with a lower strike price and sell a call option with a higher strike price. The difference between the two strike prices is your profit potential.
- Bear put spread: This strategy is used when you believe that the underlying stock is likely to go down in price. You buy a put option with a higher strike price and sell a put option with a lower strike price. The difference between the two strike prices is your profit potential.
- Iron butterfly: This strategy is used when you believe that the underlying stock is likely to stay within a certain price range. You buy a call option and a put option with a strike price above the current stock price, and you buy a call option and a put option with a strike price below the current stock price. The profit potential is limited to the difference between the two strike prices, minus the premiums paid for the options.
Tips for trading weekly options:
- Choose the right strike prices: When choosing strike prices for your options, it is important to consider the current stock price, the implied volatility, and the time to expiry.
- Use stop-loss orders: Stop-loss orders can help to limit your losses if the market moves against you.
- Monitor your trades closely: Weekly options have a short lifespan, so it is important to monitor your trades closely and make adjustments as needed.
It is important to note that all option trading strategies carry risk. You could lose more money than you invested. It is important to do your research and understand the risks involved before trading options.