What is Rolling Options?

Rolling means closing your current option and opening a new one, usually with a different strike or expiration.

Types of Rolls

Roll Out (Same Strike, Later Expiration)

  • Close current call
  • Open new call, same strike, farther out
  • Collect more premium/time value

    • Roll Up (Higher Strike, Same or Later Expiration)

  • Close current call
  • Open new call at higher strike
  • Usually for a debit, but keeps shares

    • Roll Down (Lower Strike)

  • Close current call
  • Open new call at lower strike
  • Collect more premium

    • Roll Out and Up (Most Common)

  • Close current call
  • Open new call farther out AND higher strike
  • Try to do for a credit

    • When to Roll

  • Option is ITM and you want to keep shares
  • You've captured most profit and want fresh premium
  • Upcoming event you want to avoid
  • Managing a loser - roll to reduce loss

    • How to Roll (Step by Step)

  • Look at current option value
  • Find new option you want
  • Calculate net debit/credit
  • Place as single "roll" order OR two separate orders

    • The Golden Rule

    Never roll for a debit unless you really want to keep shares. Rolling should generate a credit or be even.