How to Generate Weekly Income with Options

What if you could generate income every week from the stock market without staring at screens all day? That's the promise of weekly options trading, and when done right, it delivers.

I've been trading weekly options for years, and I want to share the approach that works. Not get-rich-quick promises, just a methodical system for generating consistent returns.

Why Weekly Options?

Weekly options expire every week (typically Friday). This creates unique advantages:

• Faster time decay — Options lose value fastest in their final days. Weekly options are always in their final days.
• More opportunities — 52 expiration cycles per year instead of 12 monthly cycles
• Quicker feedback — You know within days if your trade worked
• Lower capital tie-up — Your margin is freed up every week

The tradeoff? Weekly options require more attention than monthly trades. But with the right system, you can manage this with 30 minutes per week or less.

The Weekly Income Framework

Here's the basic approach:

1. Identify key levels — Where is the market likely to stay above or below?
2. Sell premium at those levels — Credit spreads that profit if the market stays in range
3. Manage the position — Close early for profit or adjust if the market moves against you
4. Repeat weekly — Consistency compounds over time

Trade Selection: The Key to Consistency

Not all weeks are created equal. The key to consistent income is knowing when to trade and when to sit out.

Good Weeks to Trade

• Market is range-bound or slightly trending
• No major economic releases (or they're early in the week)
• Volatility is normal to elevated (more premium to collect)
• Clear support and resistance levels

Weeks to Be Cautious

• Fed meetings (especially rate decisions)
• CPI or employment reports mid-week
• Major index rebalancing
• Options expiration during volatile periods (quad witching)
• Market at all-time highs with extended volatility crush

You don't have to trade every week. Skipping a marginal setup is better than forcing a trade that loses money.

Position Sizing for Weekly Income

This is where most traders go wrong. They risk too much on each trade, and a few losers wipe out months of gains.

The rule: Never risk more than 2-5% of your account on a single trade.

Example with a $50,000 account:

• Maximum risk per trade: $1,000 - $2,500
• If trading a $5-wide credit spread, that's 2-5 contracts
• If targeting $1.00 credit per spread, that's $200-$500 collected per week
• Monthly target: $800-$2,000 (1.6-4% monthly return)

These numbers might seem small, but they compound. A 2% monthly return is 27% annually. A 3% monthly return is 43% annually. Consistency beats heroics.

The SPX Advantage

We focus on SPX and XSP options for weekly income trading. Here's why:

• Diversification — You're trading the whole market, not a single stock
• No earnings surprises — Individual stocks can gap 20% on earnings. SPX won't.
• Tax advantages — Section 1256 gives you 60/40 tax treatment
• Cash settled — No assignment risk or share delivery
• Liquid markets — Tight spreads mean better fills

Sample Weekly Workflow

Sunday/Monday Morning (15 minutes)

• Check the economic calendar for the week
• Review key levels from gamma and price action
• Decide: trading this week or sitting out?

Trade Entry (10 minutes)

• Wait for market to open and settle
• Enter credit spread at predetermined levels
• Set alerts for adjustment points

Mid-Week Check (5 minutes)

• Is the trade on track?
• Any reason to close early or adjust?

Expiration Day (5-10 minutes)

• Close the position before expiration if in profit
• Or let it expire worthless for full credit
• Log the trade for records

Total time: About 30-40 minutes per week. The rest of the time, you live your life.

Handling Losing Weeks

You will have losing weeks. It's part of the game. The question is how you handle them.

Before the loss:

• Know your maximum loss before entering the trade
• Have a plan for when to adjust or close
• Size the position so a max loss is painful but not devastating

During the loss:

• Don't panic close at the worst moment
• Follow your predetermined rules
• Consider rolling to the next week if the setup is still valid

After the loss:

• Log what happened and why
• Don't revenge trade to "make it back"
• Stick to your normal sizing the next week

A good win rate for weekly credit spreads is 70-80%. That means 2-3 losers per 10 trades. Budget for this mentally and financially.

Using Gamma Levels

One tool that dramatically improves weekly trade selection is gamma exposure data. This shows where market makers are likely to buy or sell to hedge their positions.

In simple terms:

• Positive gamma levels tend to act as magnets — price gravitates toward them
• Negative gamma levels can accelerate moves — price tends to move away from them

We use services like SpotGamma to identify these levels, then place our credit spreads outside the expected range.

Realistic Expectations

Let's be honest about what weekly options income can and can't do:

What it CAN do:

• Generate 1-4% monthly returns consistently over time
• Provide income that's relatively uncorrelated with market direction
• Work with accounts as small as $10,000 (using XSP)
• Require minimal time once you have a system

What it CAN'T do:

• Turn $10,000 into $100,000 in a year
• Win every single week
• Work without any learning curve
• Protect you from black swan events (but sizing can limit damage)

Getting Started

If you want to try weekly options income:

1. Learn the basics — Understand premium selling and credit spreads
2. Paper trade for 4-6 weeks — Get comfortable with the mechanics
3. Start small — One contract, real money, see how you feel
4. Scale gradually — Add size only after consistent results
5. Track everything — You can't improve what you don't measure

Or, let someone else do the analysis and just follow the signals.