Rolling the Dough! 🤑🤑💵💵 Tutorial | What is a roll?

Hey mooers!

Hope you are doing fine. Instead of a Technical Analysis discussion, I was thinking I should change a little bit and talk about options series.

Thinking I may missed the opportunity, I have a few decision to make.

Before I dive in,

Now let's continue on with the decisions.

1. I could just leave it to expire

By leaving it to expire, I am telling myself that this is the cap that is going to be and it will not go beyond the strike price for the time being and I would be able to buy more shares at a cheaper price. In other words, locked in profits!

2. I can start rolling the options to sell time of covered calls. And wait for the next level of price to go up. In other words I am bullish! 🚀

Basically there are 4 types of rolling strategies

Roll out = adding more θ time

Roll up = move up in strike price⬆️

Roll down = moving down in strike price ⬇️

Roll in = Moving closer to market price.

More details from tasty live about options rolling.

So here are some of my rationale of 2 types of roll which I am currently doing now.

The reason for this is that I have plans that within the next 1 week, I may see a pullback down in the short term and decides to place a cash secured put. While waiting for that to happen, I decided to wait for a later time and roll the options to the next 18. If in circumstances it goes bearish, I can let it be sold off and ready myself to buy a cash secured put in the next week.

This is called a Calander spread strategy. 📆

What is a Calander spread? Simple answer, a Calander spread is just selling more time in hope to get more premiums while waiting for the shares to drop back to the same price.

More details below in investopedia .

More details here in investopedia:

The most crucial thing about rolling option is this. Always get a credit return!

The reason for this is that a credit return is because you would like to reduce the risk of losing. If you decide to go for a debit, it is likely you are raising your risk and start losing money.

If you are placing a covered call, you roll the options if you think the price will go higher in the long term and a pullback in the short term.

If you are placing a cash secured put, you are thinking that the price may go down further in the long term and price will be bullish in the short term.

Alright I would end my tutorial here. Hope you have a wonderful weekend. May your trades be ever in your favour. 🥂