Monthly or weekly option expiry

Trading
1

Hi,

I am a newbie in trading and I am trying to trade by buying options on the bank nifty. I have noticed that there is a monthly expiry and an expiry every week. I feel that it is safer to trade in the monthly expiry rather than weekly. But, i would like to understand the views of experienced gurus in this forum. Looking for guidance

Thanks
Sachin

2

Can you elaborate why you feel its more safer on a monthly timeframe?

3

My thought is the following

if I have a weekly expiry - say it is expiring on next Thursday but for some reason the market is down, maybe it will recover till the end of the month? Therefore I feel that it is safer.

4

A double-edged sword… As you say one can also say as I have a more extended timeframe… maybe the market will continue to fall… and since you would’ve paid a higher premium on monthly expires you have more to lose.
For a trader weekly expires give better moves (low time value) however for a positional trader monthly expires work better as spreads can be deployed in a more cost-effective way with monthly expires other than these few points I personally have never felt any diff with monthly and weekly expires.

5

Thank you for your views :+1:

1 Like
6

The weekly options are priced in a perfect ratio to the monthly options premium to offset the uncertainty. Since you told you were new a good starting point would be to back test a similar option buy strategy

  1. on weekly
  2. on monthly
    and see if you have any specific arbitrage for choosing monthly.

I personally dont feel it will work out that easily. Also expecting the market to go up just by itself is not a safe analysis.

7

Understood. Will try to do a back testing. Thanks :+1:

1 Like
8

Check out streak.tech for backtesting, that’s good

9

Thanks