Powerful Weekly Options Choices
If you think you might want to trade options, then you are probably wondering which options you should trade. The previous posts provided the foundation of the things I look for when I want to trade options. In 2023 I plan to focus more of my options trades on stocks that have weekly options. There are some stocks that don’t have options, some that only have monthly options, and some that give you the ability to trade call and put options on a weekly basis. If you are a beginner, then I believe you should focus on weekly options.
Some Good Weekly Option Stocks
Good is a somewhat relative term. I define good as a stock I am not afraid to own for the long-term and one that pays a dividend. Therefore, some of the favorite stocks we own for options trading are ABBV, AVGO, HPQ, MSFT, PFE, and VLO. Abbvie and Pfizer are pharmaceutical companies. Microsoft, HP, and Broadcom are all in the technology space. Valero is an energy company. For a beginner with limited assets, AVGO is probably not a good candidate.
What are the Dividends?
Here are a couple of Seeking Alpha images that I created by setting up a portfolio of ABBV, AVGO, HPQ, MSFT, PFE, and VLO. As you can see, they all meet my dividend requirements. Some are better than others, but the dividend payout ratio falls within the reasonable parameters of 20-50%.
What is the Historical Performance?
Dividends are just a piece of the puzzle. You want an investment that performs over the long-term. For most stocks, however, the 10-year performance is not sustainable if it is as high as the performance for AVGO. Each of these companies has proven itself for the long haul.
Weekly Options in Our Portfolio
There are certainly other stocks in our portfolio that can be used for trading options. Some of them carry a lot of downside risk. For example, RIDE and SAVA do not pay a dividend. Furthermore, they are extremely high risk, but have the potential for extremely high reward. ZIM is also in that category. Although ZIM pays a dividend, the risk of shipping stocks is very high.
Where to Find Weekly Options Stocks
There are many more stocks you can find that trade weekly options. One good source of a more complete list can be found at CBOE. The CBOE is the Chicago Board Options Exchange. Links to the CBOE are provided below.
If you are a beginner, don’t jump into options. Rather, wade into the shallow end of the options pool. I believe the best way to do that is to pick a dividend growth stock that trades weekly options. Start by trading using a wheel strategy. I explained that strategy using HPQ as an example in an earlier post in this series.
Links for Learning
Learn more about the options at The Options Institute.
Find stocks with weekly options at CBOE. This link gives you the Symbol Directory.