Weekly options have become one of the most popular tools for income-focused traders. With expirations every Friday, they offer more frequent opportunities to collect premium and generate returns. In this comprehensive guide, we will explore how to build a consistent weekly options income strategy.
What Are Weekly Options?
Weekly options are contracts that expire every Friday, as opposed to traditional monthly options that expire on the third Friday of each month. They were first introduced by the CBOE in 2005 and have grown tremendously in popularity among retail and institutional traders alike.
Key advantage: Weekly options experience accelerated time decay (theta), which benefits sellers. The last week of an option's life sees the fastest premium erosion, and weeklies let you capture this decay 52 times per year instead of just 12.
Why Trade Weekly Options for Income?
There are several compelling reasons why traders choose weekly options for income generation:
- Faster time decay: Theta decay accelerates in the final days before expiration, benefiting option sellers
- More trading opportunities: 52 expiration cycles per year versus 12 with monthlies
- Flexibility: Adjust positions more frequently based on market conditions
- Lower absolute premium: Cheaper per contract, allowing better position sizing
- Compounding effect: Reinvest profits weekly for accelerated account growth
Popular Weekly Options Income Strategies
1. Weekly Credit Spreads
Credit spreads are the bread and butter of weekly income trading. You sell an option closer to the money and buy a cheaper option further out for protection.
Example: Weekly Put Credit Spread on SPY
SPY is trading at $480 on Monday morning. You are bullish for the week.
- Sell the $470 put expiring Friday for $1.20
- Buy the $465 put expiring Friday for $0.45
- Net credit: $0.75 ($75 per contract)
- Maximum risk: $4.25 ($425 per contract)
- Return on risk: 17.6% if SPY stays above $470
2. Weekly Iron Condors
Iron condors combine a put credit spread and a call credit spread, profiting when the underlying stays within a range. This is ideal for stocks or ETFs you expect to trade sideways.
Example: Weekly Iron Condor on QQQ
QQQ is trading at $410. You expect it to stay between $400 and $420.
- Sell $400 put, buy $395 put (put spread credit: $0.50)
- Sell $420 call, buy $425 call (call spread credit: $0.55)
- Total credit: $1.05 ($105 per contract)
- Maximum risk: $3.95 ($395 per contract)
- Return on risk: 26.6% if QQQ stays between $400-$420
3. Weekly Covered Calls
If you own 100 shares of a stock, you can sell weekly calls against your position to generate income every week.
4. Weekly Cash-Secured Puts
Sell weekly puts on stocks you would like to own at a lower price. Collect premium while waiting for your entry point.
Best Practices for Weekly Options Income
Timing Your Entries
The best time to sell weekly options depends on your strategy:
- Monday/Tuesday: Capture full week of theta decay, but more time for adverse moves
- Wednesday/Thursday: Less premium but higher probability of success
- Avoid Friday morning: Very little premium left, not worth the risk
Strike Selection
For weekly income strategies, focus on probability over premium:
- Target 70-85% probability of profit (OTM options with delta of 0.15-0.30)
- Use support and resistance levels to choose strikes
- Avoid strikes near round numbers where there may be more activity
Position Sizing
Risk management is crucial for weekly trading:
- Never risk more than 2-5% of your account on a single trade
- Diversify across multiple underlyings and sectors
- Keep some capital in reserve for adjustments or new opportunities
Managing Weekly Positions
Weekly options require active management due to their short timeframe:
When to Close Early
- Close at 50-75% of maximum profit to lock in gains
- Exit if the underlying moves against you significantly
- Do not hold through major events (earnings, Fed meetings) unless intentional
When to Roll
If a position is threatened, you can roll to the next week:
- Roll for a credit whenever possible
- Consider rolling out and down/up to improve your position
- Know when to take the loss instead of rolling indefinitely
Common Mistakes to Avoid
- Chasing premium: Higher premium means higher risk. Stick to your probability targets.
- Overleveraging: Just because contracts are cheap does not mean you should trade 50 of them.
- Ignoring events: Earnings, economic data, and Fed meetings can cause outsized moves.
- Not having an exit plan: Know your stop loss and profit target before entering.
- Trading illiquid options: Wide bid-ask spreads eat into your profits.
Building a Weekly Income Routine
Successful weekly options traders follow a consistent routine:
- Sunday night: Review the week ahead - earnings, economic calendar, market levels
- Monday morning: Scan for opportunities and place initial trades
- Daily: Monitor positions, check deltas, look for adjustment opportunities
- Thursday/Friday: Close profitable positions, let winners ride to expiration
- Friday after close: Review results, update your trade journal
Track Your Weekly Options Trades
Pro Trader Dashboard automatically imports and tracks all your weekly options trades. See your win rate by strategy, day of week, and underlying. Identify what is working and optimize your weekly income approach.
Realistic Expectations
Weekly options income can be lucrative, but set realistic expectations:
- Target 1-3% weekly return on capital at risk (not total account)
- Expect losing weeks - they are part of the business
- Focus on risk-adjusted returns, not just total premium collected
- Account for commissions and fees in your calculations
Summary
Weekly options provide excellent opportunities for income generation through accelerated time decay. By focusing on high-probability setups, managing risk carefully, and following a disciplined routine, you can build a sustainable weekly income strategy. Start small, track everything, and refine your approach over time.
Ready to explore more income strategies? Learn about monthly options income or discover the wheel strategy for consistent returns.