Weekly Options Trading - What You Need to Know Before You Start

Want to trade weekly options for weekly income but not sure where to start? This article breaks down what are weekly options, how to trade them, and what a good weekly options strategy looks like. Before risking money, learn how weekly options trading really works - and what to avoid.

Key takeaways

• Weekly options trading is a short-term strategy using contracts that expire every Friday, giving traders frequent opportunities
• You can use weekly options to target quick profits from events like earnings or data releases
• Weekly strategies focus on rapid time decay and require precise trade management

What Are Weekly Options?

The best way to explain what weekly options are is to say that weekly options are short-term options contracts that expire every Friday, unlike standard options which expire once a month. The idea is simple: more expiration dates mean more chances to trade.

These contracts were introduced by the CBOE in 2005 through a pilot program, starting with a few tickers. Since then, weekly options trading has grown quickly, especially on popular names like SPY, QQQ, AAPL, and more. Now, most liquid ETFs and large-cap stocks have weekly expirations.

Compared to monthly options, weeklys give you more flexibility and more chances to act on short-term events like earnings or news releases.

If you want to learn how to trade weekly options for weekly income, you’ll need to understand time decay, pricing behavior, and how to build a solid weekly options strategy. This section is just the beginning.

Weekly Options Trading: Pros and Cons

Here’s a quick look at the main advantages and disadvantages of weekly options trading:

Let’s break that down. The main pros you should know about weekly options trading are the following ones:

• One of the biggest advantages of weekly options trading is the ability to target specific events in the short term. If a company reports earnings on Wednesday, you can use options that expire Friday to make a short-term play. The same goes for CPI releases, Fed announcements, or market-moving news.
• Premiums are usually cheaper than monthly options (unless, of course, the monthly expiration happens to coincide with the weekly one). This means you don’t need a lot of capital to get started. For small accounts, this opens the door to building a weekly options strategy that’s both active and manageable.
• You also get more chances to trade. Instead of waiting for monthly expirations, you can trade weekly options four or five times a month.

However, beware of the main cons of weekly options trading:

• Weekly options lose value fast. Time decay kicks in hard, especially in the last few days. If you are an option buyer and your trade is wrong, you don’t have time to wait it out or adjust slowly. Note that, if you are an option seller, time decay will be your best friend.
• Some strikes also suffer from low liquidity. That leads to wider bid-ask spreads, which can eat into your profits or make it harder to exit. 
• Finally, with just a few days between entry and expiration, things move quickly. If the trade goes against you, there’s not much room to repair it.

If you want to learn how to trade weekly options for weekly income, you’ll need to accept the tradeoff: more opportunities, but faster-moving risks.

How to Trade Weekly Options for Weekly Income

If you're looking to use weekly options trading to generate steady income, your focus should be on repeatable setups with limited risk. Two of the most popular strategies are:

• Selling covered calls on stocks you already own
• Selling cash-secured puts on stocks you want to own

Our screener for options trades has predefined scans that help with this. You can try setups like “Continuous Covered Calls on dividend paying stocks” or “Sell OTM puts with high margin of safety.” You can even come up with your own scan if you have a specific strategy in mind. We’re leaving a couple of useful links for you at the bottom of the article.

To build a weekly options strategy that actually works, stick to these principles:

• Trade liquid tickers like SPY, QQQ, AAPL, or MSFT. These have tight bid-ask spreads and better execution.
• Build a weekly routine: Check for major events (earnings, Fed decisions), analyze implied volatility, and review key support/resistance levels before placing trades.
• Start small: Keep trade size manageable. Weekly options move fast, and losses can stack up quickly if you oversize.
• Focus on defined-risk trades: Use spreads if needed. Don’t sell naked options without understanding the risk.
• Don’t force trades: Skipping a week is better than chasing a bad setup. Income should come from high-quality trades, not random bets.

Learning how to trade weekly options for weekly income takes patience. But with the right process, you can stack small, repeatable wins instead of relying on big predictions.

Choosing a Weekly Options Strategy

There’s no one-size-fits-all when it comes to weekly options trading. Your strategy should match what the market is doing and how you expect it to behave over the next few days. Here are some practical options:

• Credit spreads work well when you expect a directional move but want to limit risk. A bull put spread or bear call spread can give you a defined-risk setup with a solid risk-reward profile.
• Iron condors are ideal for sideways markets. You collect premium if the stock stays within a set range, making it a common weekly options strategy when things are calm.
• Straddles and strangles are better suited for big events like earnings or Fed meetings. You’re betting on a big move but don’t have to guess the direction.

To trade weekly options effectively, use both technical setups and event-driven catalysts. For example, if a stock is sitting on support before a CPI release, you might lean bullish with a credit spread.

Also, check implied volatility. If it’s high, premiums are rich and credit strategies become more attractive. If it’s low, directional plays like debit spreads might make more sense.

Before you place any trade, ask yourself:

• Is the market trending or range-bound?
• Is there a news event coming?
• What’s the volatility like?

The more your weekly options strategy fits the market environment, the better your odds of success. Always think risk first, income second.

Weekly Options Trading - Simple Example Trades with Weekly Options

If you use our Scenario feature (check out the link at the bottom of the article), you can quickly explore different ideas based on your view of the market. Here are a few basic weekly options trading examples to show how different strategies play out.

Let’s say SPY just pulled back and is trading around 599. You sell a 595 cash-secured put expiring in 5 days and collect around $0.60 in premium. The trade pays off if SPY stays above 595. If it drops, you might be assigned shares at that price - so only do this if you’re willing to own them. It’s a simple way to use weekly options trading for steady income with a neutral to bullish view.

Another setup: let’s say MSFT has earnings this week and is trading around 470. You expect the stock to stay in a tight range after the announcement. You set up an iron condor by selling a 465/460 put spread and a 475/480 call spread, both expiring in a few days. If MSFT stays between 465 and 475 through expiration, both spreads expire worthless and you keep the premium. If it moves outside that range, your risk is limited to the width of the spreads minus the premium received. Just be mindful of early assignment risk, especially with short legs that go deep in the money. It’s rare, but knowing when early exercise can happen is part of good risk management.

These examples show how a weekly options strategy can be adapted to different scenarios with clear goals and risk limits.

When Not to Trade Weekly Options

One more thing: avoid weekly options trading on tickers with low open interest or illiquid strikes - the spreads will eat you alive. If there’s a major macro event and you’re not hedged, it’s usually better to sit out. One more thing: avoid weekly options trading on tickers with low open interest or illiquid strikes – the spreads will eat you alive. Learning how to read an option chain helps you avoid bad setups and spot where liquidity is missing.

Weekly options don’t give you time to recover if your timing is off, so skip them when you need more room to be right. Sometimes, the best weekly options strategy is doing nothing at all. If there’s no catalyst, no edge, and nothing you’d bet your own money on, don’t trade weekly options just to stay active. Wait for quality setups.

Read More on Weekly Options Trading

Continuous Covered Calls on dividend paying stocks

Sell OTM puts with high margin of safety

Scenario engine