When looking to combine Japanese candlestick charting techniques when trading options, you may find a great setup based on the candles but the option chain may not be ideal to trade. The great thing about honing your trading skills using Japanese candlestick charting techniques is that you’re focusing on the price of the stock, ETF, future, etc. that you’re trading. With technical indicators, they offer unique perspectives on the behavior of the underlying but they typically lag the price itself because they aren’t focusing on the price itself like Japanese candlestick charting does.
Why Use Weekly Options?
One of the benefits to using weekly options is that their price can track the price of an underlying more closely and change faster than monthly options. Weekly options are options that are listed to provide expiration opportunities every week. Weeklys are typically listed on Thursdays and expire on Fridays, provided that such expirations were not previously listed (i.e, Weeklys are not listed if they would expire on a 3rd Friday or if a Quarterly option would expire on the same day). Weekly options can provide opportunities for investors to implement more targeted buying, selling or spreading strategies. Weekly options can help investors efficiently take advantage of market events, such as earnings, government reports and Fed announcements.
Weeklys are listed each week except that no new Weeklys are listed that would expire during the expiration week for regular options which is the third Friday of each month, nor would they be listed if they would expire on the same date as a Quarterly option on the same underlying. Quarterly options are only listed for certain underlyings and expire at the end of each calendar quarter. Quarterly option sexpire at the end of March, June, September, and December. Not many underlyings offer quarterly options but the current underlyings that do are DIA, XLE, IWM, XSP, QQQ, XEO, SPX, SPY, and GLD.Other than index options like SPX Weeklys, closing times for Weeklys options match the closing times for regular, non-weeklys on the same underlying.
A recent addition allows trading in up to five consecutive Weekly Option expirations for certain equities, ETFs, ETNs, and indexes being listed at the same time. Currently the underlyings that have multiple series consecutive Weekly Option expirations with extended listings at this point include AAPL BAC BP C EEM GLD IWM QQQ SPY XLF. More underlyings might be added in the future as well.
The list of underlyings that have weekly options can change week to week so it’s important to monitor which underlyings have weekly options available. Your broker might be able to provide a list of which weekly options are available but if they don’t provide a current list. You can refer to the list by clicking here. In addition, the list can be accessed via a Microsoft Excel.
In my own trading, I combine candlestick charting with western technical to find ideal trade setups.I recently created a presentation that further discusses weekly options and how to combine them with Japanese candlestick charting techniques by Steve Nison. In this video, I show you more about how you can advance your knowledge of combining weekly options with Steve Nison’s Japanese candlestick charting techniques.