What A Crazy week for all traders trading SPY weekly Options.
The Spike in Volatility due to the Coronavirus fear created unprecedented opportunities.
Maybe you may have missed out or looking to get into options trading as a business.
This is surely the best time to do so: this article will tell you How and Why.
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Trade SPY Weekly Options: Craziest Week Ever
The world markets just closed on a heck of a week.
All major indexes dropped sharply amid Coronavirus expansion and its impact on the global economy.
Here are a few numbers to consider.
In a short span of 5 trading days, we went from an All Time High in SPY ETF over $338 to $289.
This 15% drop is depicted in the chart below.
While this decline in equities can be unsettling for long term investments accounts, it was a unique time for SPY weekly options Traders to profit from the huge swings in prices.
Trade SPY Weekly Options: What Is Next ?
We have shared in precedent discussions Why this very Exchange Traded fund is a great vehicle for trading weekly Options.
This week we put that knowledge in display with tremendous gains in both direction through the technique of scalping explained in this video.
Implied Volatility on SPY Weekly Options
To be honest, SPY was not the only asset to generate huge profits for Day and Swing Traders this week.
Most stocks follow the same pattern with some showing great resilience in the midst of the selloff.
Those stocks are the ones to watch for in the upcoming weeks in case of a V-shapped recovery.
I am talking about the pattern where a sharp drop is immediately followed by an even sharper uptrend.
SPY Weekly Options Volatility vs SPX weekly Options
A question I often get from Weekly option trader is why the implied volatility on SPY weekly options is Higher than the implied volatility on SPX weekly Options.
The reason is because the SPX weekly options are way more expensive due to the price difference between SPY and SPX.
The ratio is 1 to 10 as you know between SPY and SPY stocks.
So the Implied volatility on SPX weekly options is sometimes lower because it reflects the potential movement on higher priced options.
It would take a bigger move from those options to appreciate as much as their cheaper SPY counterpart.
Trade Weekly Options From Successful Tradings Watchlsit
From my personal Watchlist, I noticed Nvidia (Ticker: NVDA) and Netflix (Ticker:NFLX).
Both of these staged bounce on Thursday and Friday respectively that are bound to follow through.
If the close on Friday, February 28 is of any hint, we could expect to have another wild ride in March.
This time, in the uptrend direction.
How To Trade SPY Weekly Options
At the time of this writing, there is no clear indication that the current downtrend is over.
What we may have seen on Friday close was end of the month adjustment by big institutions.
The first Day of March shall provide a clearer direction where the market is headed.
What Time Do SPY Weekly Options Expire
SPY provide 3 Expirations to trade Weekly options with.
On each one of the SPY weekly Expiration days, Monday, Wednesday and Friday, you can trade SPY weekly options all the way to 4:!15PM EST.
This gives you an extra 15-minute you can use for a day trade or a swing trade for the next closest expiration.
In general, I use both SPY Options day trade and Swing trade as I can set up the hedge for the swing trade while ridding the trend for the day trade.
The reason I do this is because late on expiration days, the cost for the SPY weekly Options is very low.
Thus it makes it a great opportunity to have a Low Risk with huge Reward potential as depicted on the view below.
What this means for you as a SPY weekly Options trader is that you will have a chance to profit from this volatility.
Best SPY Weekly Options Strategies
By applying sound strategies like the ones discussed our SPY Trading System article..
These are set of successful and winning Options trading strategies we have been recommending for SPY as well as other stocks on our Watch list.
Here is an illustration video on How we traded SPY Weekly Options successfuly.
I have been getting questions on YouTube if the SPY Option trading Tips shared on this blog can be applied to other stocks.
The answer is Yes for the most part although SPY weekly Options are prime for major gains because the expiration are more frequent.
Write us a comment below or email us directly if you would like a Copy of the stocks in our Watch list.
To fully understand the Power of these techniques, here is a short video we published last week on the gains we generated by simply applying which that we have seen work over and over in SPY Weekly Options trading.
We hope you enjoyed the content of this description of Trading SPY Weekly Options.
We Showcased the arguments that make SPY one of the the best stocks (if not the best overall) to trade weekly options with.
Maybe you are a beginner trader, in which case we may suggest you learn more about other fundamentals of trading.
Or perhaps you are looking to get an edge in 2020 in your trading, here are example of tools to get you there.
We invite you to mingle and interact with us and other fellow traders on our YouTube Channel.
TBP || Becoming A Successful Stocks and Options Trader