Options 101: Rolling

A “roll”, in options parlance, is simply a position adjustment where an investor closes out a position in one options contract and opens a similar position in another contract. Rolling happens a lot around the expiration, as investors close out positions in contracts that will soon expire and open similar positions in later expiration months. Investors sometimes roll positions within the same expiration month to different strike prices. For example, if an investor buys a put with a $50 strike price and the stock falls from $50 to $45, they might bank a profit in the 50s by rolling to the puts at the 45 line. That is, they sell-to-close the 50s and buy-to-open the 45s. Many online brokers today offer tools to quickly roll positions with just one or two mouse clicks.

Category: Trading Education