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Wednesday, September 7, 2011

Weekly options - FAQ


Weekly options are one week options: the options exchanges list equity options (including ETF options) having approximately one week to expiration following their initial listing. These options are called "Weekly Options Series" or "Weeklys".


Weekly options were introduced in October 2005 by the Chicago Board Options Exchange, when they created four weekly index options: SPX, XSP, OEX, and XEO.

The options are listed every Thursday, and they expire the following Friday. Weekly options are available on all the usual stocks and indexes, such as the S&P 500 Index (SPX), along with the major exchange-traded funds (ETFs), such as the Financial Spider Select XLF.

Weekly options are also available on some of the most widely traded equities such as, includes Apple Inc. (Nasdaq: AAPL), Exxon Mobile Inc. (NYSE:XOM ), and JPMorgan Chase & Co. (NYSE: JPM). The list of stocks and futures that are traded regularly change. Information with regard to availability are listed on the CBOE web site.

    When listed

    • New Weeklys are listed each Thursday or Friday (depending on the listing exchange's rules) except that no new Weeklys are listed on the 2nd Thursday of the month (see below)
    • Weekly options expire the following Friday
    • No new Weeklys are listed that would expire during the expiration week for standard options (the third Friday of each month). In other words, the exchanges do not list new Weeklys on the 2nd Thursday of a month and do not trade Weeklys during the following, standard expiration week until new series are listed on Thursday of that week.
    • If the following Friday is an OCC holiday, the weekly option series will expire on the Thursday preceding the holiday. 
    Benefits
    Trading weekly options have many benefits. The options have a shorter duration than standard options which expire every 3rd Friday of the month. Shorter dated options will cost less than longer dated options, because there is less time value which generally drives up the price of an option. You should trade weekly options when you are looking for short term movements in a market.

    Weekly Options Specifications
    • The Chicago Board of Options Exchange offers three different types of weekly options, along with weekly settlement data and volume/open interest information. Some of the options they offer have morning settlements while others offer PM settlement.
    • Weekly options are traded using American-style exercise features, which make then exercisable at any point prior to the expiration date. On expiration, the buyer has the right but not the obligation to receive the underlying instrument.
    • Liquidity on weekly options is robust, with the average weekly volume for the new weekly options increasing above 300,000 contracts by November 2010.
    Weekly index options
    • SPX Weekly- represents the S&P 500 index with trading starting every Thursday A.M. and settlement on the following Friday A.M. Therefore the SPX Weekly expires every market's Thursday close.
    • XSP Weekly- represents the S&P 500 index but at 1/10th the value.
    • OEX Weekly- represents the S&P 100 index with trading starting every Friday A.M. and settlement on the following Friday P.M. Therefore the OEX Weekly expires every market's Friday close.
    • XEO Weekly- is identical to the OEX Weekly except XEO can not be exercised until its expiration date while OEX can be exercised before expiration date.

    All four weekly index options  are cash-settled options.

    2 comments:

    1. Something for Chris....
      https://www.bloomberg.com//news/articles/2018-05-17/pope-goes-off-on-cds-market-calls-derivatives-ticking-time-bomb

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    2. New weeklys from JohnMarch 30, 2019 at 1:48 PM

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