The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “Should you buy near-dated weekly options as a hedge?” Now, the answer to this question is not a simple black and white, yes or no answer. What you have to understand about buying near-dated weekly options specifically buying them as a hedge is that they are a tradeoff of risk and reward. To me, I always try to help you guys understand what are you giving up and what might you potentially get in reward by entering a hedge that's a weekly contract. Now, specifically, a lot of traders like to use weekly contracts because they want to hedge a very particular time period. Maybe there's a special FDA announcement, a legal proceeding, an earnings announcement, a merger announcement potentially coming, all of these things that could happen in a very defined window of time. And so, for that just one week, they choose to buy weekly options or sell weekly options, whatever they’r