Make Three Paycheques a Month

In less than six months, weekly options have already surpassed the traditional monthly options in terms of volume. For options buyers, the minimal time value attached to the price along with the shortened time horizon during this continued bull market rally has made weekly options much more attractive.

For options writers, the 5-day life of the calls and puts gives longer-term stock holders the ability to make money every week without capping gains. It's quite common for an options writer, especially long-term holders who generate income via the covered call strategy, to see 17 days later that their covered call is deep in the money, capping their gains. This common problem has pushed many traders to head towards the weekly options, which allows the investor to gauge the value of the stock on a weekly basis and gives investors the opportunity to roll out or roll up their call.

Over the past month, big-name technology equities have posted decent weekly option premiums. Last week, Netflix, because of earnings, allowed an at-the-money options writer to make over $700 per contract, when the stock was trading around $155. That works out to 4.5 per cent in a week. That's more than some people make on a two-week pay cheque! In general though, most of the options trading at the money are providing about 1.5 per cent return for the week.

October 29 options for some larger name equities priced in the $100 range, which I find the most suitable for myself because of the lowered costs on options commission per contract, are paying out about $200 today. The table below illustrates how weekly options on some majorly helds could pay out 50 to 75 per cent a year without capital appreciation.

Stock Name	Current Price	Strike Price	Option Bid	Weekly Return (%)
Bank of America (BAC)	11.15	11.00	0.34	1.70
General Electric (GE)	16.12	16.00	0.23	0.74
Intel (INTC)	19.92	20.00	0.13	0.65
Microsoft (MSFT)	25.25	25.00	0.57	1.27
Microsoft (MSFT)	25.25	26.00	0.18	0.71
Baidu (BIDU)	109.90	110.00	2.08	1.89
Goldman Sachs (GS)	157.56	160.00	0.96	0.61
Netflix (NFLX)	166.59	165.00	4.20	1.57
Netflix (NFLX)	166.59	170.00	1.83	1.10
Amazon (AMZN)	169.38	170.00	2.33	1.38
Apple (AAPL)	310.26	310.00	3.25	0.96
Google (GOOG)	617.90	620.00	5.50	0.89

If you would like me to continue posting the weekly numbers for the above equities on this blog, or include other stocks, please let me know and I will do this every Monday.

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- Return (%) assumes only the option premium received and subtracts assignment differences if the option is in-the-money.
- Option premiums will differ every week due to outside factors, including, but not limited to volatility, news releases, dividend payments, mergers, etc.
- Prior to implementing option strategies, discuss all trades with your investment advisor. The information provided is not designed to be professional advice, but shared stories of personal strategies that have worked over the past month. Past performance is not indicative of future gains.