Why Weekly Options Are Riskier Than Monthly
For options traders, weekly contracts might seem like a way to boost returns — but they come with hidden risks that monthly options often avoid. If your goal is consistent income with manageable risk, understanding these differences can save you from unnecessary headaches.
📉 Liquidity Challenges on the TSX
Most TSX weekly options have far lower open interest and daily volume compared to monthly contracts. This means:
- Wider bid-ask spreads → harder to get fair fills
- Slippage eats into your ROO (Return on Option) %
- Rolling positions can be difficult without giving up premium
⚡ Higher Volatility Risk
Weekly expirations are more sensitive to short-term news, earnings announcements, and market swings. A single unexpected headline can send premiums surging — or collapsing — in hours.
Monthly options, with more time until expiry, tend to have smoother price movements and less risk of sudden assignment due to one-day spikes.
💵 ROO Stability
Return on Option (ROO) tends to be more predictable for monthlies. Weekly premiums can look attractive on paper but often fail to annualize well after factoring in missed fills, slippage, and more frequent commissions.
🛡️ Why Monthly Options Fit Better for Most
- Better liquidity and tighter spreads
- Easier rolling before assignment
- Less stress — fewer trades to monitor daily
- Consistent income stream with fewer execution issues
🎯 When Weeklies Might Make Sense
- Event-driven plays where you want short exposure
- Targeted earnings or ex-dividend strategies
- Hedging an existing short-term risk
If you use weeklies, set stricter open interest and spread width thresholds to avoid thin markets.
🧠 Final Tip
For covered call and put writers, monthly expirations usually win on execution quality, ROO stability, and peace of mind. Weeklies can be a useful tactical tool — but treat them as a specialty strategy, not a default.
🛡️ Find Liquid Monthly Setups on Optrader
⚠️ This article is for education only and not investment advice. Policies and market conditions change; confirm details with your brokerage.
