Weekly Options: Conservative to Outrageous

Short puts on weekly options can make you money whether you hate risk or love it

   

There are now more than 175 weekly options traded in big-name stocks like Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) and the premiums you can generate by selling weekly puts or calls range from the tiny to the ridiculous, meaning your positions can generate annualized profits that range from conservative to outrageous.

Here are three weekly options trades to look at whatever your trading style is.

Conservative

JPMorgan Chase & Co. (NYSE:JPM)is considered the best of the big banks by many and in my service Options Income Blueprint I have sold puts on JPM – including weekly puts – many times. If you executed this position midday Wednesday, selling to open (shorting) a weekly JPM Nov 30 Expiration $40 Put when the stock is trading between $40 and $41, you can generate an immediate return of about 0.4% or an annualized return of more than 18%.

Outrageous

Questcor (NASDAQ:QCOR) is a smallish biotech type outfit – though very profitable – that I discovered around 50 cents and now sells north of $27.

The reason you want to sell puts against it is simple: The stock was $59 earlier this year. An insurance company – just one – said it would no longer pay for QCOR’s treatment for multiple sclerosis spasms. Traders who sold off the stock didn’t bother to look to see that QCOR gets more than 75%-80% of sales from selling its treatment for infantile spasms. Insurance companies, even the ones we may not love, do not let babies die.

The stock has stabilized but the premiums on the puts and calls are still ridiculously high. If you sold to open (shorted) a weekly QCOR Nov 30 Expiration $25 Put right now, if I read my screens right, you could generate a 1% return in two and half days. Not bad.

If you are reading at a time when these price points for premiums no longer hold as true, no worries – these are, after all, weekly options.  Find a full list of all weekly options by clicking here, or or shoot me an email at service@tradersreserve.com.

Your Third Option: Sell on Expiration Friday

Oh, that third choice I mentioned above? You actually have a couple. If you own 100 shares of Apple, or have enough capital to support a short put position on Apple, consider selling a weekly put or call at 2 p.m. on Friday, one or two strikes out.  Do the math: You can generate up to an 8% annualized return if you are nimble and do this every week.

Or you can think small. Look at selling to open (shorting) Ford (NYSE:F) or Bank of America (NYSE:BAC) puts on Friday, assuming you don’t own the stock. Or, if you own the shares, look at selling calls. You can generate some serious meal money selling weeklies Friday afternoon on these names – again, if you are nimble and do it almost every week. The only caveat with such low cost names is you must use a deep discount broker or commissions will kill you when you sell the options. Assuming they expire worthless, you do not have to worry about commissions to buy them back; you will not need to buy them back and you get to keep all of the premium you collected upfront.

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