Benefits

What advantages do weekly currency options offer over regular monthly options? Options that expire every four to five weeks can be difficult to incorporate in short-term trading strategies. Weekly currency options allow you to tailor strategies — especially those that incorporate both futures and options — to a shorter time frame, rather than a monthly outlook. Traders sometimes fall into the trap of using long-term macro approaches to trade short-term price movement. If you want to capitalize on short-term
trends, it’s logical to use short-term tools.

Each trading week many economic numbers are released in the United States and overseas that affect the value of the dollar and foreign currencies. If you believe a specific currency, such as the EuroFX (EC), is going to react to a particular number, you might want to position yourself accordingly in the market. However, if you think this move is going to occur in a specific week, you may be caught in the predicament of paying for the time value of a longer-dated monthly option. With a weekly option, you can tailor your trade to the specific time window that contains the opportunity.

Each week presents a new opportunity to speculate or hedge underlying currency futures with options. One technique that can be used in a variety of trading situations is to structure positions according to the most recent weekly trading range, to take advantage of expected price action within or outside this range.