Lamborghini Aventador Versus Weekly Options
By R. Nelson Molina, MD.
Hello traders, I have always wanted to write about weekly options, not about what everyone knows and the big lie that they can make you rich in one day or two, not about all the strategies on how to use them to make money but to compare securities to one of my favorite sports car the Lamborghini Aventador.
First of, what are weekly options? Weekly options are options that are listed to provide expiration opportunities every week. Weeklies are typically listed on Thursdays and expire on Fridays. These securities contract were introduced in 2005. 32 years after introducing the call options, now there is little information about how to successfully trade securities, but tons of articles on how someone has made millions or billions trading weeklies. Don’t get me wrong; weekly options are powerful securities if you want to get the big bang for the buck. From my experience you can make lost of money with this type of securities but you can also destroy your trading account in seconds, seconds? Yes seconds, if you buy at the wrong time on the wrong day.
I compare weekly options with a high-performance mid-engined sports car the Lamborghini Aventador. One of the best sport car ever made, built for speed, extreme style and extreme performance; Weekly options can give you speed and extreme performance and can help investors efficiently take advantage of market events, such as earnings, government reports and Fed announcements.
These are the facts:
Lamborghini Aventador top speed: 350km/h, Acceleration 0-100 km/h (0-62 mph): 2.9s
Weekly Options top speed: unlimited the closer to expiration the highest the acceleration.
Lamborghini Aventador Brakes: Dual hydraulic circuit brake system with vacuum brake booster; front and rear CCB, (6-cylinder brake calipers, 4-cylinder brake calipers); Ventilated discs "Carbo-ceramic discs Ø 400 x 38 mm – Ø 380 x 38 mm"
Weekly options Breaks: price fluctuations make it almost impossible to use breaks when trading these securities.
Lamborghini Aventador airbag: Front dual stage driver airbag and front adaptive passenger airbag; seats with side “head-thorax” airbags; passenger and driver knee airbags.
Weekly options airbag: none you buy puts or calls against direction the impact on your account can be painful.
Lamborghini Aventador fuel consumption: 11 mpg in town and maybe 15 on the highway.
Weekly options Fuel consumption: Same week expiration and out of the money weeklies have high Theta. Which refer to as the time decay on the value of an option. If everything is held constant, then the option will lose value as time moves closer to the maturity of the option.
Summary: Buying weekly options its like driving a Lamborghini Aventador with no breaks, no airbags and only a few gallons to drive 100 miles; so, you can barely use stops, you have no protection if price goes against your trade, and you have little time to get to your target, my question to you would be, would you drive a Lamborghini down a hill with not breaks, no airbags and no gas to turn your wheel?
My recommendation, don’t buy weekly options if you don’t have a probe strategy, paper trade first, and don’t put money that you are not allow to loose.