Short-dated contracts listed to expire on a specific weekday, giving fine control over event timing at the cost of brutal time decay.
Weeklies were an extension of the old monthly-only calendar. Liquid underlyings now list expirations on several weekdays, and the busiest names effectively expire every trading day, which is where zero-dte trading comes from.
The appeal is precision: you can buy exposure that covers an earnings report and nothing else. The cost is that theta and gamma are both enormous in the final days, so being right on direction but a day early still loses.
Example: XYZ at $50 with earnings Thursday. The weekly $50 straddle costs $2.00 and the monthly costs $3.40. The weekly gives you the event for 41% less premium, but if XYZ moves $1.50 on the print, the weekly straddle can still be worth less on Friday than you paid.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Time decay of an option's value. The part of an option's price that is only time — its extrinsic value — drains away every day and must reach zero at expiry. The slide is gentle months out and steepest in the final weeks, which is what traders call theta.Long straddle: payoff at expiry. A 100 call and a 100 put bought together for 8 make a V. A quiet market that ends near 100 costs the whole 8; the position only turns positive once the price finishes below 92 or above 108, whichever way it goes.
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