Basic Point

Weeklys are a type of options contract that expires on any given day, rather than traditional monthly expiration cycles.

Intermediate: Weeklys and Liquidity

Monthly options are usually more liquid than weeklys, but even if a trader does not trade weeklys, checking to see if an option has weeklys can be a good way to see if options on that security are sufficiently liquid. 

Only the most liquid options tend to have weeklys since they have enough interest to spill over into more granular expiration options. This means that even if your strategies only prefer to trade monthlies (for their supreme liquidity etc), it can still be helpful to check each ticker and see if it has weeklys. 

If a stock or ETF does not have weekly options, then it might be too risky to trade them, as a liquidity trap can take away or even invert what would otherwise be strong profits for the taking. What this can look like is entering a trade when the bid/ask spread is tight, generally from a low volume trade. But then a few days into the trade the bid or ask disappears. This sort of situation is not uncommon with less liquid products.

If liquid enough, weeklys can be used to match a trader’s criteria more closely, such as if they would prefer to trade at 45 DTE, but the next monthly expirations are 30 and 60 days apart. Also, weeklys allow for very-near contract expirations to be used for binary events such as earnings.

For index products, the difference of weekly or monthly can have consequences far beyond liquidity. For SPX, all monthly contracts expire in the AM and all weekly contracts expire in the PM. Getting caught with an AM expiration means a loss of control and taking on jump risk for that last overnight gap, and since it is SPX (with a x1000 multiplier) that can do a lot of damage with even one contract.