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Sign me up for the Money Morning newsletter. To loosely paraphrase Robert Burns, the best-laid plans of mice and stock traders sometimes go awry. But with some creative use of weekly options, that doesn't necessarily mean you have to take your losses.

Just under two weeks ago, we suggested a " short iron condor " as a possible short-term strategy for playing the release of first-quarter earnings reports for some of the leading financial stocks, using J.

JPM as a specific example. That should have sent the stock nicely higher, giving us a quick gain on our condor — and JPM did indeed try to rally — but then our best-laid plans took a wrong turn. The broad market turned sharply lower that Friday, with the Dow Jones Industrials dropping Morgan along with it.

The trade went south. But had you been on your toes, you would have noticed this about JPM: And, given the healthy earnings and a "powerful buy" rating last Thursday from Zacks Investment Researchit probably won't close below that level again.

That's important because J.

Morgan is one of the 60 or so individual stocks plus 30 indexes and ETFs on which "weekly" options are traded. It's through the use of these relatively new trading vehicles that we can quickly recover the loss we just suffered on our JPM iron condor trade.

Weekly options on equities are less than two years oldbut they are already highly popular for a variety of purposes, ranging from hedging against short-term pullbacks to speculating on quick price reversals, either up or down.

Perhaps the most popular strategy, however, is selling "weeklys" to generate a steady income stream — or, in our case, offset earlier short-term losses. For those unfamiliar with them, weekly options were introduced by and trade on the Chicago Board Options Exchange CBOE. They come in both puts and calls, like regular monthly or quarterly options, and have a range of strike prices surrounding the current price of the underlying stock.

OPTIONS STRATEGY - SELLING WEEKLY PUTS - ykewobuzyjeca.web.fc2.com Stock Screener

However, they have a lifespan of just eight calendar days — being introduced on Thursday and expiring on Friday of the following week. For trading purposes, they're designated as Wk1, Wk2, Wk4 and, if a month has five Fridays, Wk5. No weeklys are created expiring on the third Friday of the month since that's when the regular monthly options expire.

All it involves is selling an out-of-the-money weekly option representing a move opposite the price move you expect in the underlying stock. In other words, if you think the stock is likely to fall in the how stocks are trading on the stock market philippines week, you sell the weekly call option — or, if you think the stock price will riseyou sell the weekly put option.

The risk, of course, is that the stock will move counter to what you expect, putting the option you sold in the money and forcing you to buy it back before expiration — though, given the rapid time-value erosion, that can you make money trading weekly options necessarily mean you'll take a loss on the trade.

Even so, you'll have to post a margin deposit to do the trade, the amount of which you can estimate by using the CBOE's " Option Margin Calculator. If you want to avoid posting the full margin requirement, you can cover part of it by buying an option of the same type, how to stock market dummies further out of the money.

That option should cost only pennies, and you'll only have to post the difference between the two strike prices, less the net premium you receive for the option you sell. Obviously, it's too late to do that now. By the time you read this, the AprilWk4 put premium will likely be less than a quarter of last Thursday's levels — stock market crash housing bubble if JPM's price hasn't changed at all.

But that's the nice thing about weekly options — you get another chance to sell the barclays stockbrokers foreign dealing account JPM MayWk1 put today or tomorrow. Merely adjust the strike price accordingly, based on the underlying stock price at the time.

Then, binary option bully reviews jobs repeating the strategy every week. You'll quickly recover your full condor loss, after which you can start generating a regular weekly income from J.

Morgan — without even owning the stock. You can also use this strategy with any of the other stocks on which weekly options trade, generating income from them for far less than you'd have to invest to actually buy the shares. News and Related Story Links:. Click here to jump to comments…. That's one of the better, shorter and least complicated explanations of using puts and calls effectively that I have seen in a long time.

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How to make money trading weekly options # ykewobuzyjeca.web.fc2.com

How to Trade Weekly Options. View Comments Start the conversation Leave a Reply Click here to cancel reply. DENACO April 26, That's one of the better, shorter and least complicated explanations of using puts and calls effectively that I have seen in a long time.

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Michael just got back from a huge cannabis industry conference in "Oaksterdam," and the most exciting thing he found there points to a "weird," profitable pot stock pick. The price of silver continued to fall last week following the hawkish tone from the Fed on Wednesday.

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