Weekly vs. Monthly Options: A Complete Guide for Traders

Options trading allows investors to hedge risk, generate income, or speculate on market movements using contracts linked to underlying assets, such as stocks or indices. One key feature of any options contract is its expiration date, which determines the period during which the contract remains valid. Based on when they expire, options are mainly divided into two types: weekly options and monthly options.

In this article, we will help you understand what are weekly and monthly options are and show how they are different so you can make better trading decisions.

What Are Weekly Options?

Weekly options are options contracts that expire every Thursday in India. If Thursday is a market holiday, the expiry is moved to the previous trading session. These contracts work just like regular options, but they last for a much shorter duration. 

Weekly options trading allows investors to capitalise on short-term price fluctuations in stocks or indices. As these options expire quickly, they are ideal for day traders and scalpers. They are also commonly used to take positions ahead of market-moving events such as corporate earnings, monetary policy announcements, or economic data releases.

However, the shorter expiry also means less time for a trade to become profitable. This leads to faster time decay (theta) and often higher volatility, increasing both the potential reward and the level of risk. As a result, weekly options are better suited for experienced traders who can closely monitor market movements and react quickly.

Why Weekly Options Are Popular:

• Lower cost compared to monthly options
• Good for short-term trading strategies
• Useful around events like earnings announcements or news
• Provide more frequent trading opportunities
• Flexible entry and exit points every week

What Are Monthly Options?

Monthly options are options contracts that expire once a month, usually on the last Thursday of the month. In case Thursday happens to be a trading holiday, the option will expire on the day before. These are the most commonly used options in the market and are available on many stocks and indexes.

Monthly options last longer than weekly options as they stay active for several weeks. This gives traders more time to decide what to do with their trade. Because of the extra time, these options are often used by people who follow longer-term plans, like protecting their investments (called hedging) or earning regular income by selling options.

Since they give you more time, monthly options usually cost more than weekly ones. However, they also carry less risk because you don’t need the stock price to move quickly in a short time.

Why Monthly Options Are a Good Choice:

• Give you more time for your trade to work
• Better for long-term strategies
• Less risky than short-term weekly options
• Often used to protect investments or earn income
• Easy to trade

Key Differences Between Weekly and Monthly Options

Here’s a table that shows the main differences between weekly and monthly options:

Conclusion

Understanding the difference between weekly and monthly options is key to becoming a better options trader. Weekly options have a short lifespan, making them well-suited for traders looking to profit from short-term price movements. Monthly options, on the other hand, are more suited for those who prefer long-term strategies and need more time to manage their trades. By learning how these option contracts work and paying attention to their expiration dates and strike prices, you can choose the right type for your trading plan. 

Open a 3-in-1 account with Torus Digital today and start trading weekly and monthly options easily!