Options Trading Strategies (Weekly/Monthly Expiry)

Introduction
Options trading is a powerful tool that offers flexibility, leverage, and hedging opportunities to traders. While buying and selling options is accessible, mastering strategies tailored for weekly and monthly expiries can significantly improve your chances of success. These expiry-based strategies are designed to take advantage of time decay (Theta), volatility (Vega), direction (Delta), and price range (Gamma).

This guide will deeply explore how traders approach weekly vs monthly expiry, key option strategies, risk-reward setups, and market conditions under which they’re best applied. It’s designed in simple, human-friendly language, ideal for both beginners and experienced traders.

Part 1: Understanding Expiry Types
Weekly Expiry Options
Expiry Day: Every Thursday (for NIFTY, BANKNIFTY) or the last Thursday of the week if Friday is a holiday.

Time Horizon: 1–7 days

Used by: Intraday and short-term positional traders

Purpose: Quick premium decay (theta decay is faster), suitable for short-duration strategies.

Monthly Expiry Options
Expiry Day: Last Thursday of every month

Time Horizon: 20–30 days

Used by: Positional traders, hedgers, and institutions

Purpose: Manage risk, longer setups, or swing trades; smoother premium decay compared to weeklies.

Part 2: Key Greeks in Expiry-Based Strategies
Understanding how Greeks behave around expiry is crucial:

Theta: Time decay accelerates in the final days (especially for weekly options).

Delta: Determines direction sensitivity; weekly options are more delta-sensitive near expiry.

Vega: Volatility effect; monthly options are more exposed to volatility changes.

Gamma: High near expiry, especially in ATM (At-the-Money) options — can lead to quick losses/gains.

Part 3: Weekly Expiry Strategies
1. Intraday Short Straddle (High Theta Play)
Setup: Sell ATM Call and Put of current week’s expiry.

Objective: Capture premium decay as the price stays around a range.

Best Time: Expiry day (Thursday), typically after 9:45 AM when direction becomes clearer.

Example (NIFTY at 22,000):

Sell 22000 CE and 22000 PE for ₹60 each.

Conditions:

Low India VIX

Expected range-bound movement

No major news or global event

Risks:

Sudden movement (delta risk)

Need for proper stop-loss or delta hedging

2. Short Iron Condor (Neutral)
Setup: Sell OTM Call and Put; Buy further OTM Call and Put for protection.

Risk-defined strategy, ideal for weekly expiry when you expect low movement.

Example:

Sell 22100 CE and 21900 PE

Buy 22200 CE and 21800 PE

Benefit:

Controlled loss

Decent return if the index stays in range

When to Use:

Mid-week when implied volatility is high

Event expected to cool off

3. Long Straddle (Directional Volatility)
Setup: Buy ATM Call and Put of the same strike.

Best for: Sudden movement expected — news, results, RBI event.

Example (Bank Nifty at 48,000):

Buy 48000 CE and 48000 PE

Break-even:

Needs large move to be profitable (due to premium paid on both sides)

Risk:

Premium loss if market remains flat

4. Directional Option Buying (Momentum)
Setup: Buy CE or PE depending on market trend.

Ideal for: Trending days (Tuesday to Thursday)

Time decay: High risk in weekly expiry. Must be quick in entries and exits.

Example:

Bank Nifty bullish -> Buy 48000 CE when price breaks above a resistance.

Tips:

Use support/resistance, volume, and OI data

Avoid buying deep OTM options

5. Option Scalping on Expiry Day
Method: Trade ATM options in 5-minute or 15-minute chart using price action.

Goal: Capture small moves multiple times — 10 to 20 points in NIFTY or BANKNIFTY

Works Best:

Thursday (expiry)

Volatile days with good volumes

Tools:

VWAP, OI buildup, Breakout strategy, Moving Averages

Part 4: Monthly Expiry Strategies
1. Covered Call (Long-Term Positioning)
Setup: Buy stocks (or futures), sell OTM call options

Goal: Earn premium while holding stocks

Example:

Buy Reliance stock at ₹2800

Sell 2900 CE monthly option for ₹50

Best For:

Investors with long-term holdings

Stable stocks with limited upside

2. Calendar Spread (Volatility Strategy)
Setup: Sell near expiry (weekly), buy far expiry (monthly)

Example:

Sell 22000 CE (weekly)

Buy 22000 CE (monthly)

Goal:

Earn premium from weekly decay, protect via long monthly

Best Time:

When volatility is expected to rise

Ahead of big events like elections, RBI meet

3. Bull Call Spread (Directional)
Setup: Buy ATM Call, Sell OTM Call

Risk-defined bullish strategy

Example:

Buy 22000 CE, Sell 22200 CE (monthly)

Payoff:

Limited profit, limited risk

Better risk-reward than naked option buying

Use When:

Monthly expiry in bullish trend

Budget rallies, earnings momentum

4. Bear Put Spread (Downside Protection)
Setup: Buy ATM Put, Sell OTM Put

Use for: Bearish view with limited loss

Example:

Buy 22000 PE, Sell 21800 PE (monthly)

Ideal For:

Volatile times with expected downside

FII outflows, global corrections

5. Ratio Spread (Moderately Bullish or Bearish)
Setup: Buy 1 ATM Option, Sell 2 OTM Options

Warning: Can cause unlimited loss if trade goes against you

Example (Bullish Ratio Call Spread):

Buy 22000 CE, Sell 2x 22200 CE

Conditions:

Monthly expiry

Expect mild upward move but not aggressive rally

Conclusion
Trading weekly and monthly expiry options offers unique opportunities and risks. Weekly options give fast profits but demand sharp timing and discipline. Monthly options offer more flexibility for directional, volatility, and income-based strategies.

Whether you’re a scalper, trend trader, or risk-averse investor, there’s a strategy suited for your style — but success depends on combining the right strategy with sound analysis, proper risk control, and emotional discipline.