#4 – Weeklys Can be Used as Inexpensive Insurance
If you are a trader who carries positions with negative gamma, you get longer as the market declines and shorter as it rallies. That’s a recipe for losing money. Traders often carry such positions because they collect time decay to compensate for market risk.
Any time that risk is too high, or any time the trader requires a quick, but temporary fix, Weeklys can be bought. It’s true that these come with plenty of negative time decay, but when too much money can be lost on a big move, Weeklys, with their explosive gamma, provide excellent (temporary) insurance against that move.