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Standard options expiring on the third Friday of each month. The most liquid expiration cycle with the deepest open interest and tightest bid-ask spreads.
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Key takeawayMonthlies are the default choice for premium sellers. Deepest liquidity, tightest spreads, highest OI. Use weeklies only when the monthly doesn't match your DTE target.
💡 Why It Matters
Monthlies are the backbone of premium selling. Third-Friday expirations have accumulated the most open interest, the tightest spreads, and the deepest liquidity of any expiration cycle.
⚙ How It Works
Expire on the third Friday of each month. Listed up to 2-3 years out (for LEAPS). Near-term monthlies have the deepest liquidity. Far-dated monthlies have less OI but are still more liquid than equivalent weeklies.
📋 Example
The May monthly (May 16) has 45,000 OI on the SPY $570 put. The May 23 weekly has 8,000 OI on the same strike. The monthly fills tighter and absorbs larger orders without moving the price.
⚠ Common Mistakes
Ignoring monthlies in favor of weeklies just because weeklies are 'newer.' Monthlies have structural liquidity advantages that weeklies rarely match, especially in the 30-60 DTE range.
⚡ Monthly Option in VolRadar
❓ FAQ
What is Monthly Option?
Standard options expiring on the third Friday of each month. The most liquid expiration cycle with the deepest open interest and tightest bid-ask spreads.
Why does Monthly Option matter for premium sellers?
Monthlies are the default choice for premium sellers. Deepest liquidity, tightest spreads, highest OI. Use weeklies only when the monthly doesn't match your DTE target.
How does Monthly Option work?
Expire on the third Friday of each month. Listed up to 2-3 years out (for LEAPS). Near-term monthlies have the deepest liquidity. Far-dated monthlies have less OI but are still more liquid than equivalent weeklies.
What are common mistakes with Monthly Option?
Ignoring monthlies in favor of weeklies just because weeklies are 'newer.' Monthlies have structural liquidity advantages that weeklies rarely match, especially in the 30-60 DTE range.
Related Terms
60/40 Tax Treatment
The favorable tax split for Section 1256 contracts: 60% of gains are taxed at the long-term capital gains rate and 40% at the short-term rate, regardless of ...
Adjusted Option
An option whose terms have been modified due to a corporate action — stock split, special dividend, merger, or spinoff.
All-or-None Order
An order that must fill completely or not at all, but unlike FOK, it can wait in the book for a complete fill rather than canceling immediately.
American-Style Option
An option that can be exercised by its holder at any time from listing until expiration.
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