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Do Weeklys Weaken Options?

Weekly products have added to confusion of option options


As an options trading investor do you ever get the feeling the Chicago Board Options Exchange (NASDAQ: CBOE) created Weekly options to simply facilitate plays around Apple (NASDAQ: AAPL) product announcements? It’s not even 11 am as I type this, and AAPL 360 Calls expiring tomorrow have traded 14,400 times, exceeding the pre-existing open interest of 11,100. That number even surpasses volume of regular expiration AAPL March 360 Calls, which have changed hands 10,200 times. We’ve looked at AAPL with one day to expiration before and seen this, though rarely quite this early in the day. We won’t know for sure until tomorrow, but it’s highly likely this volume is simply trader to trader, and not much in the way of position opening.

We’re seeing this push into Weeklys in the Exchange Traded-Funds too. PowerShares QQQ (NASDAQ: QQQQ) Weekly expiring March 58 Calls have traded 29,800 times, versus 15,900 in regular expiration March 58 calls. Same in SPDR S&P 500 (NYSE: SPY), though not as stark as its 34,000 Weekly expiring SPY 133 Calls, versus 28,000 regular expiration March calls.

All of this raises a question. Have Weeklys actually added to options volume, or simply diffused it over more expirations? I mean right here, right now in SPY and QQQQ we have Weeklys expiring tomorrow, just listed Weeklys expiring a week from tomorrow, regular-cycle March expiring on March 18th and quarterly options expiring March 31st. Weeklys have clearly caught on, but I don’t know the ultimate answer to that question.

Follow Adam Warner on Twitter @agwarner.

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