There is nothing wrong with weeklys. Of course, it all depends how you trade them. Before, when weeklys were new, there was a problem with liquidity. Not anymore. Then, if you trade weeklys as monthlys, meaning you pick a weekly option but still with 30 or more days to expiration. For example, you pick BA February 28, 2020 280 put option, which is still a weekly options but with 37 days to expiration then there is nothing wrong doing it. You will just have more options to pick strikes and expiration dates than just monthlys.
If you, however, want to trade them a truly weeklys meaning you want to pick them to have 7 days to expiration then there is also nothing wrong with it but be prepared for potential limitations (I wouldn’t call it risks because I deem options less risky than stocks) such as short term to expiration will limit your ability to adjust the position should it go against you, you would have to be too close to the market to collect a decent premium so you run a risk of ending in the money – which is OK when trading equities rather than SPX, for example, and there may be a limit that if you want to roll from one weekly to another, or to monthly or quarterly option, the strikes you want to roll in may not exist and you would have to roll to different strikes which may change the entire trade characteristic and risk profile (for example adding more risk to the trade). Other than that, there is no problem at all.
My view on options, mainly my claim that options are less risky than stocks, sparked controversy among less informed:
This guy “deems options less risky than stocks”.
I would advise you against taking him seriously. ~ Jacob Nikolau
If you think that I am wrong, as the guy suggested, then review the following situation:
A trader A buys 100 shares of a stock at $30 a share.
A trader B sells a cash covered put with 26 strike price.
The stock ends at $20 a share at expiration.
Trader A sees $1,000 loss.
Trader B sees $600 loss.
Who holds a riskier asset?
Trader A holds 100 shares of a stock ABC at $30 a share and does nothing.
Trader B holds 100 shares of a stock ABC at $30 a share and sells 20 strike call options (ITM option) and receives 12.55 premium.
The stock drops to 22 a share. Who is better off? Trader A or trader B?
Where is the risk? On the stocks or the options?
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