Understanding weekly and serial options in Australia

In Australia, options can be either weekly or serial. Both types of options have their unique characteristics, impacting how they are traded. It is essential to understand the difference between these two types of options before trading them.

Weekly options are options that expire at the end of the trading week. They are typically only available on popular underlying assets, such as stocks, indices, and currencies. Serial options are options that have a soon-to-be-released asset as the underlying. These options allow investors to gain exposure to a new asset shortly before it is released onto the general market.

Weekly vs serial options

Trading hours

Another difference between these two types of options is the trading hours. Serial options are traded only during regular market hours, while weekly options can be traded after hours. Traders need to be aware of the different trading hours when dealing these options.

Premiums

The premium is the price of the option contract. The premium for weekly options is typically higher than the premium for serial options because weekly options are more volatile and have a shorter time to expiration.

Trading volume

The trading volume is another crucial difference between these two types of options. Weekly options tend to have higher trading volumes than serial options because they are more popular with traders and investors, serial options being a niche product.

Liquidity

Liquidity refers to the ability to buy or sell an asset without adversely affecting the market price. Weekly options tend to be more liquid than serial options because they are more popular and have higher trading volumes.

Risk

The risk of an option is the potential loss that a trader could incur. Weekly options tend to be riskier than serial options because they are more volatile and have a shorter time to expiration.

Reward

The reward of an option is the potential profit that a trader could make. Weekly options tend to have higher rewards than serial options because they are more volatile and have a shorter time to expiration.

Margin requirements

Margin requirements are the minimum amount of money that a trader must deposit to trade an option. The margin requirements for weekly options are typically higher than for serial options because they are more volatile and have a shorter time to expiration.

Availability

Weekly options are typically only available on popular underlying assets, such as stocks, indices, and currencies. Serial options are typically available in a broader range of underlying assets, including commodities and bonds.

Settlement

The settlement price is the price at which the option contract is settled. The settlement price for weekly options is typically higher than the settlement price for serial options because they are more volatile and have a shorter time to expiration.

Exercise

Exercise refers to buying or selling the underlying asset at the strike price. The exercise price is when the option contract can be exercised. Weekly options can be exercised before their expiration, while you can only exercise serial options on their expiration date.

How to trade weekly and serial options

Choose an underlying asset

The first step in options trading is to choose an underlying asset. Traders can choose from various assets, including stocks, indices, currencies, commodities, and bonds. Serial options are unique in that they allow you to gain exposure to futures contracts that are not yet listed on the general market.

Select a time frame

Weekly options are traded during the regular market hours and after hours. Serial options are only traded during regular market hours.

Choose an expiration date

The third step is to choose an expiration date. Weekly options expire at the end of the trading week, while serial options expire at the end of the month.

Select a strike price

The fourth step is to select a strike price. The strike price is when the option contract can be exercised.

Choose a call or put option

The fifth step is to choose a call or put option. A call option gives the trader the right to buy the underlying asset at the strike price, while a put option gives the trader the right to sell the underlying asset at the strike price.

Place your trade

Now you are ready to place your trade. You can do this through a broker or an exchange.