The field of weekly option trading is constantly being updated and changing. The CBOE has added three new popular assets to trade using weekly options.
New Weekly Options – 1 social, 1 chinese tech and 1 currency etf
LinkedIn (LNKD) is one of the new comers to the weekly option arena. Since these options are fresh off the mint, it’s still to early to tell what the volumes and open interest will be. The current implied volatility levels are equivalent to the farther out months. The bid-ask spreads on LNKD weekly options are fairly wide at around 50 cents which will make it a difficult candidate to trade. If you’re bearish on the future of social media stocks, it would probably better to trade options series of father out months. See why social media stocks are doomed. Trading the LNKD weeklys would probably be good to trade short term bearish sentiment since the market tends to punish highly over-valued tech stocks during market drops.
Youku.com (YOKU) has entered the weekly option space. Youku is the Chinese equivalent of Youtube. Liquidity is a bit low for YOKU options, with the monthlys trading with open interest of 100′s. Since YOKU is trading at around $14.50 currently, the low price makes it unattractive for option traders. The volatility is pretty wild here, mover 100%. Personally I’ll keep away from trading these weekly options.
The last (and most important) newcomer is the FXE – the CurrencyShares EURO trust. This is a timely addition to the weekly option offering from the CBOE. With the recent unrest related to the Italian debt crisis, the FXE is one of the best assets to trade European sentiment. With the high price of $132, narrow bid ask spreads and massive open interest, this is an ideal candidate. If you’re bearish on the euro (who isn’t?) then definitely look into purchasing some put options on the FXE.
The CBOE has struck ISRG off the list of available Weeklys, I assume due to the low open interests. Apparently traders haven’t been jumping at the bit to get their hands on ISRG options.
Quick summary of the changes to the weekly options:
On November 22nd the CBOE made the following changes:
- ISRG weekly options removed.
- LNKD weekly options added.
- YOKU weekly options added.
- FXE weekly options added.