How they differ:
Trading weekly and monthly options both have their pros and cons. Which ones you trade should depend on your risk tolerance and trading strategy.
Weekly options expire at the end of the trading week, typically on a Friday. On the other hand, monthly options expire at the month's end. The key difference between the two is the time horizon they offer. Weekly options provide traders with more short-term opportunities to profit, while monthly options offer a longer-term perspective.
Additionally, weekly options typically have higher implied volatility, which can make them more expensive, while monthly options tend to be more stable and less volatile. This can benefit traders looking to take advantage of short-term price movements or hedge positions.
Theta Decay Considerations:
The theta decay of weekly options is much more aggressive when trading weekly options. Since they expire much sooner than monthly options, you have less time to be right in your trade.
Theta decay of monthly options is much less aggressive since they have much more time until expiration. So essentially, monthly options are more stable than weekly options since they aren’t affected by theta as much.
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