Rolling means closing an existing option and opening a similar one at a different strike, a later expiry, or both, usually in a single order.
Common rolls
- Roll out: same strike, later expiry. Buys more time.
- Roll up or down: same expiry, different strike. Adjusts to where the price has moved.
- Roll out and up/down: both at once, common with covered calls and short puts.
When it makes sense
Roll when your original reason for the trade still holds and the new position is one you would open today on its own merits. Try to roll for a net credit when you are an option seller.
When it does not
Rolling a losing trade again and again to avoid booking a loss is a common trap. Each roll adds time and risk. If the view is broken, close the trade.
This article is for education only and is not financial advice. Options involve risk and are not suitable for every investor.