Rolling Options Explained, Part 1: Understanding The Basics And Why Rolling Matters
SAXORolling lets you adapt an options trade without starting over - by changing the strike, expiry, or both. This first article in a four-part guide introduces the concept using covered calls and cash-secured puts, with clear examples of both offensive and defensive rolls.
Rolling options, part 1: understanding the basics and why rolling matters
This article is part of a four-part mini-series on rolling options—created for investors and active traders alike. Whether you’re just starting out or already trading more advanced strategies, understanding how and when to roll will help you manage risk, stay flexible, and adapt with confidence.
If you’ve ever found yourself wondering what to do with an options position that’s moving faster—or slower—than expected, you’re not alone. It’s a common moment for both new and experienced investors: the trade is still in play, but the timing, price, or outlook has shifted. This is where rolling comes in.
Rolling simply means closing your current option and replacing it with another one on the same stock, but with a different expiration date or strike price. It’s like rescheduling a meeting that still matters—you’re not cancelling, just adjusting it to fit the new context.In this first part of our series, we’ll look at rolling through the eyes of a beginner. We’ll explore how it works, why you might use it, and walk through two real-world examples: a covered call and a cash-secured put. Along the way, we’ll keep the tone practical, approachable, and grounded in real decisions investors face.
A fresh way to look at rolling
Think of it like booking a holiday months in advance. You had good reasons for choosing the dates and destination at the time, but now that the trip is approaching, something’s changed—maybe the weather, your schedule, or the travel deals. Instead of cancelling the trip altogether, you reschedule it: same idea, different timing, and a better fit for your needs now. That’s the basic idea behind rolling in options. You’re still in the same game, just giving yourself a different position and more time to work with.
Let’s say you’ve sold a put option on Company ABC—a bullish position where you’re happy to buy the stock if it dips, but ideally you'd prefer to collect the premium without being assigned. The stock pulls back a bit—not dramatically, but just enough that your short put is feeling a bit too close for comfort. You’re not quite ready to take the shares, and you want to keep some flexibility. So, you roll: you buy back the current put and sell a new one, with a slightly lower strike and more time to expiry. Same strategy, new setup.
This is all rolling means:
Our platforms make this easy by letting you do it in one step with a "roll" ticket. But beneath the surface, it’s simply two trades.
The three things you adjust when you roll
Rolling lets you tweak the key ingredients of an option:
These changes help you adapt the trade to match a new outlook or to better manage risk.Important note: The strategies and examples described are purely for educational purposes. They assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor must conduct their own due diligence, considering their financial situation, risk tolerance, and investment objectives before making decisions. Remember, investing in the stock market carries risks, so make informed decisions.
A covered call in motion
Imagine you bought 100 shares of Company ABC at $100. To generate income, you sell a call option with a $105 strike that expires in three weeks. You collect $1.50 in premium.Now Company ABC climbs to $104. Your call is nearly in the money. You still like the stock and want to leave room for more upside. So you roll the short call up and out—maybe to the $110 strike, one month further out. You collect an additional $0.80.This is what’s called an offensive roll. Things are going well, and you're adjusting the trade to give yourself more opportunity. You’re still in the trade, but you’ve given it more time and space.
A helpful comparison: think of this like a freelance job that’s going well. You renegotiate the contract—longer term, slightly better terms, and a bit more pay. You’re still doing the same work, just with a setup that makes more sense now.Now flip the situation. Company ABC falls to $95. Your call is far out-of-the-money, and there’s little premium left. You might choose to roll it down and out—say, to the $102 strike next month. That brings in $0.60 in new premium and slightly improves your breakeven.This is a defensive roll. The trade hasn’t worked out as planned, but you’re staying calm and making a measured adjustment to improve the setup.
Rolling covered calls gives you a way to stay engaged with your positions without being boxed in by the original plan.
A cash-secured put in a shifting market
Now consider the other side of the coin: a cash-secured put. You sell a $95 put on Company ABC, 21 days to expiration, collecting $2.00. If assigned, you'd be happy to own the stock at $93.But Company ABC rallies to $104. The put is now worth very little. Rather than close it for pennies, you decide to roll up and out—you close the $95 and sell a $100 put for next month, collecting another $0.70. Your potential entry point moves higher, and you’ve collected more income.This, again, is an offensive roll. You’re using strength in the stock to reposition, just like arriving early at a train station and waiting for a more direct train with better seating.
If Company ABC drops to $92, you may feel the pressure building. Instead of letting the option run straight into assignment, you roll down and out to the $90 strike, one month out, and take in $0.60. Now your breakeven is lower, and you’ve given the position more time to stabilise.Cash-secured puts work well when markets are stable, but rolling gives you a way to navigate the more turbulent stretches with control and intent.
What separates offensive and defensive rolls
The mechanics of rolling are the same whether the trade is going well or not. The key difference is your intent:
Rolling shouldn’t be automatic. It’s not a button you press when uncertain. It’s a choice that should come from understanding the trade’s new shape, and what you want from it now.
Wrapping up
Rolling gives you options—literally and figuratively. It’s a practical way to stay active in your positions without starting from scratch. You can shift your risk, extend your timeline, or give yourself another chance to earn income. And all of it can be done within the comfort of strategies you already know.In part 2, we’ll build on this foundation and explore how rolling works in more complex strategies like vertical spreads and iron condors—showing how adjustments change risk and reward.
