I’ve never done this before but I want to make sure I understand the logic before I have to use it someday. Can someone explain to me the reason why you would roll your options?
Isn’t that just essentially closing out your current position and buying into a position?
Is there any benefit in clicking the roll button vs. just buying a new contract and selling your current one?
Am I missing something??
Posted by memphisgas
5 Comments
You can often reduce your slippage by transacting on a single order as opposed to executing two separate orders.
>Isn’t that just essentially closing out your current position and buying into a position?
Yes.
>Is there any benefit in clicking the roll button vs. just buying a new contract and selling your current one?
One less order. Plus, you execute at your selected credit/debit; if you do separate orders, you’re subject to any movement between the time of the first and the time of the second, and lose control of the difference.
Rolling short options lets you trade time, for some credit and hopefully a better strike, hoping for mean reversion or reversal.
Rolling a long option is just doubling down (or moving to a more OTM option to lock in profit i guess).
Besides comissions/slippage, nah its the same thing.
This is why there is a Tastytrade
https://ontt.tv/5t8sO What is a Roll? Jun 6, 2022
It’s also a way to avoid assignment and have a chance to keep your shares, but I learned the hard way about doing months long ITM rolls