Definition
Rolling an option means closing a position that is near expiration or no longer well placed, and simultaneously opening a similar position at a different strike, a later expiration, or both. It is a single adjustment, often executed as one combined order.
Traders roll to extend the life of a trade, to escape an unfavorable strike, or to lock in part of a gain while keeping exposure. Rolling does not erase a losing trade — it restructures it.
Why it matters
How it works
A trader executes two legs together: buy back the existing option and sell a new one at the chosen strike and expiration. Rolling a profitable covered call up and out can capture more premium while raising the assignment price. Rolling a threatened short put down and out lowers the obligation price and adds time. The key discipline is honesty about why the roll is happening — rolling to give a sound trade more time is reasonable, but rolling repeatedly to avoid admitting a loss can compound the damage. A roll should still pass the same risk-reward test as a fresh trade.