Weekly vs. Monthly Options: What’s the Difference?
Weekly options expire every week, usually on Fridays, while monthly options expire once a month, typically on the third Friday. Both work the same way mechanically, but the shorter timeline of weekly options means faster time decay, lower premiums, and less room for a trade to play out.
If you’ve looked at an options chain and noticed multiple expiration dates just days apart, you were looking at weekly options. Here’s how they compare to the more traditional monthly contracts.
Key Takeaways
- Weekly options expire every week, while monthly options expire once a month, usually on the third Friday.
- Weekly options generally cost less per contract, since there’s less time value built into the price.
- Time decay (theta decay) moves faster on weekly options, since expiration is always close by.
- Monthly options give a trade more time to develop, which can suit less frequent, more research-driven strategies.
- Not every stock offers weekly options, while most optionable stocks offer monthly expirations.
What Are Weekly Options?
Weekly options, sometimes called “weeklys,” are option contracts that expire at the end of nearly every week, rather than just once a month. They’re available on many popular, heavily traded stocks and index funds, though not on every stock that has options.
Because they expire so frequently, weekly options let traders target very specific short-term events, like an earnings announcement or an economic report, without paying for weeks of extra time they don’t need.
What Are Monthly Options?
Monthly options are the more traditional type of contract, and they expire once each month, typically on the third Friday. They’ve been the standard in options trading for decades and are available on the vast majority of stocks that offer options at all.
Monthly options give a trade more breathing room, since there’s more time for a stock to move the way you expect before the contract expires.
Key Differences Between Weekly and Monthly Options
Premium Cost
Since weekly options have less time until expiration, they carry less time value, and generally cost less per contract than a monthly option on the same stock and strike price. This lower cost can be appealing, but it also means less room for error if your timing is off.
Speed of Theta Decay
Theta decay, the daily loss of value from time passing, moves faster on options that are closer to expiration. Weekly options are, by definition, always close to expiration, so they experience rapid, compressed time decay throughout their short life. Monthly options decay more gradually, especially in the earlier part of their life, before speeding up in the final weeks.
Sensitivity to Price Moves
Weekly options tend to react more sharply to short-term price swings, since there’s little time value cushioning the price. A quick move in the stock can have an outsized effect on a weekly option’s value, for better or worse.
Trading Volume and Liquidity
Monthly options, especially on well-known stocks, often have deeper trading volume and tighter bid-ask spreads (the gap between buying and selling prices), which can make them easier to trade at a fair price. Weekly options on very popular stocks can also be liquid, but this varies more from stock to stock.
A Simple Comparison
| Feature | Weekly Options | Monthly Options |
|---|---|---|
| Expiration frequency | Every week (typically Fridays) | Once a month (typically third Friday) |
| Premium cost | Generally lower | Generally higher |
| Theta decay speed | Fast, throughout the option’s life | Slower early on, speeds up near expiration |
| Time for a trade to develop | Very limited | More room to work |
| Availability | Only on select stocks and index funds | Available on most optionable stocks |
| Common use | Short-term, event-driven trades | Broader directional or income strategies |
When Might You Use Weekly Options?
Weekly options tend to suit traders targeting a specific short-term event, such as an earnings report, a product announcement, or an economic data release, where they expect a price move within just a few days.
They’re also used for short-term income strategies, like selling weekly covered calls, since the fast time decay can mean collecting premium more frequently.
When Might You Use Monthly Options?
Monthly options tend to fit trades built around a broader outlook, where you expect a move to unfold over several weeks rather than a few days. They’re also generally more forgiving if your timing is slightly off, since there’s more time left for the stock to still reach your target.
For beginners specifically, in practice many traders find monthly options a bit more approachable at first, simply because there’s more time to observe how the position responds to changes in the stock price without immediate expiration pressure.
Risks to Keep in Mind
Both weekly and monthly options carry the same underlying risks as any option contract, including the possibility of losing your entire premium if the stock doesn’t move as expected. Weekly options add an extra layer of timing pressure, since there’s very little room to be wrong about when a move will happen. As with any options strategy, it’s worth starting with contracts and strategies you fully understand, and only risking money you can afford to lose.
Frequently Asked Questions
Are weekly options riskier than monthly options?
They can carry more timing risk, since there’s less room for the stock to move in your favor before expiration. The overall risk also depends heavily on the specific strategy you’re using, not just the expiration length.
Do all stocks have weekly options?
No. Weekly options are typically limited to popular, heavily traded stocks and certain index funds. Most stocks that offer options only offer monthly expirations.
Why are weekly options cheaper than monthly options?
Weekly options have less time until expiration, which means less time value built into the premium. Less time for the stock to move generally means a lower price for the contract.
Can beginners trade weekly options?
Yes, though many beginners find monthly options easier to start with, since the slower pace gives more time to understand how the position behaves as the stock price and time both change.
Is theta decay worse with weekly options?
In relative terms, yes. Weekly options are always close to expiration, so they experience the faster stage of theta decay throughout their entire short life, rather than just in the final weeks like a monthly option.
