Online Trading Options Strategies
Rolling is defined in options online trading as moving a position from one strike to another either vertically in the same month, horizontally to another month or some combination thereof.
Other times, you may have to buy your short call back so that you will not lose your stock. Sometimes, you may even want to allow the stock to be called away if you have decided that the stock has reached a level were you want to take your profits and begin to look for another opportunity.
The term roll means to move your position either out to the next strike or to move your position up or down a strike in the same month. The term roll means to move.
Rolling is normally done via time spread and/or vertical spreads. Without getting into the trading of spreads, which is a unique strategy in itself and a topic for future Options University courses, we will talk a little about the roll.
As stated before, the covered call strategy is most effective when executed month in and month out over an extended period of time.
In order to do this, an online trading investor must re-initiate the position every month at the option's expiration. The re-initiation of the position every month is where the term rolling comes from. However, there may be times when you may want to give yourself a little more upside room for capital appreciation. In those rare cases, you will not want to roll the position, because it might be called away if the call you sold is exercised when it becomes in the money.
When an option's expiration approaches, your short option can either be in-the-money or out-of-the-money. As we discuss the two potential outcomes, let's first assume that we want to hold onto our stock.
If the option is going to finish out of the money, you would let it expire worthless and then sell the next month's call. If the option is going to expire in-the-money and you want to keep the stock you will need to buy the short option back and sell the next month's call.
This trade will consist of two online trading options. You will be buying one option and selling another, which is commonly known as a spread and is referred to as a single trade.
So, when you roll out your covered call or buy-write, you do it by doing a spread. The front month option, the one that you happen to be short, will be bought back thus ensuring you keep your stock.
The second month option will be sold short thus re-initiating your covered call strategy. The position that remains is long stock and short calls. As far as the selection process of the spread used for the rolling of the position, there will be some choices.
Of course, there is no choice as to the front month option, you must buy back the option you are short. However, you do have a choice as to the next month option you are going to sell, whether it be near term or farther out in expiration.
This goes back to our earlier conversation about lean. If you are no longer bullish then you would not have bought back your short call and instead allowed it to be exercised and have the stock called away from you. If you choose to roll the position then you must be somewhat bullish on the online trading stock. Your lean will dictate to you which new option to sell.
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
If You Would Like to Learn More About Online Trading
Then Discover How to Protect Your Investments
With the Leveraged Power of options & Learn How
to Trade options Like the Pros..
Click Here --> http://www.options-university.org
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
Latest News
 guardian.co.uk | Microsoft's Ballmer to CES: keep investing in tech despite ... Scientific American - Las Vegas , NEV. -- In his first ever CES keynote, Microsoft CEO Steve Ballmer yesterday acknowledged the tough economic times, but urged companies not to ... Microsoft: the year ahead Microsoft releases Windows Server 2008 R2 beta Windows 7 beta available worldwide on Friday |
 The Money Times | The Best Investment Values in a Decade Motley Fool - These days, we're presented with what Ron Muhlenkamp a few months ago called "the best investment values we've seen in a decade." Obviously, the market has ... You Are About to Make a Bad Investment The Flight to Safety Could Burn You Wednesday's Biggest Stock Stars |
 Wealth Bulletin | How to avoid a Madoff fund San Francisco Chronicle, USA - Feeder-funds (hedge funds or funds that do all their investing through another fund) and funds-of- funds sold investment services to individuals, ... The Financial Services Industry’s Free Lunch Fund-of-Hedge Funds Lacked Technology to Avoid Madoff Losses D Bank declined offers to invest with Madoff |
 Dividend.com | Billionaire investor places next supermarket bet MarketWatch - Yucaipa's investment funds have been aggressive buyers of Whole Foods shares since Nov. 24, spending a net $98 million to amass the stake. ... Activist shareholder buys 7 percent stake in Whole Foods Billionaire investor Burkle bets on Whole Foods |
Thomas, McNerney & Partners Promotes Three Members of Its ... PR Newswire (press release), NY - Thomas, McNerney & Partners is a health care venture capital firm with approximately $600 million under management, focused on investing in life science and ... |
US investment in IT would create jobs, group says ITworld.com, MA - by Grant Gross A US$30 billion investment by the US government in broadband, health IT and smart energy grids would create or retain nearly a million jobs, ... New ITIF Report Documents How $30 Billion IT Stimulus Package ... $30B IT Stimulus Will Create Almost 1 Million Jobs |
Invesco Fund Loss Stirs Investor Fears Wall Street Journal - By DIYA GULLAPALLI 'Stable-value" investment funds have been one of the last havens in employee-retirement accounts. But one, advised by money manager ... |
Appleseed Fund Ranked by Lipper as Top Performing Midcap Value ... CNNMoney.com - "Since the Appleseed Fund's inception, we've shown it's possible to outperform the market by investing in companies with strong sustainability records and ... |
New T. Rowe Price mutual fund eyes global investment Bizjournals.com, NC - T. Rowe Price Group Inc. is launching a new mutual fund seeking reward amid the risks of global fixed-income investing. The Strategic Income Fund will ... |
 Telegraph.co.uk | Learning from Madoff's Ponzi scheme WKOW-TV.com, WI - Another important lesson from the Madoff Ponzi scandal is that investing money successfully also requires some homework on your part. "If you're investing ... Video: Congress Sounds Off Against SEC in Madoff Affair Congress Demands SEC Speed Madoff Inquiry to Improve Oversight Re-defining Risk: 5 Investment Rules for 2009 |
Resources
-
No Money Down - Creative Real Estate Investing!
Learn how to control real estate Without credit checks and no money down! You can Buy With No Credit!
-
real estate foreclosures- home69
Proven real estate Investing course specializing in foreclosures and pre-forclosures.
-
Real Estate Investing
How To Start And Run Your Own outrageously Profitable Fixer-Upper Business In As Little As 45 Days, even If You Can
-
Foreclosures - Real Estate Investing - Short Sales.
Learn about foreclosures and real estate Investing techniques like short sales and subject to financing
-
Online Trading for Financial Freedom - stock daytrading strategy.
Stock index trading strategy for beginning and experienced traders alike.
-
Real Estate Investing - Foreclosures
How To Start And Run Your Own outrageously Profitable Fixer-Upper Business In As Little As 45 Days, even If You Can
-
Real Estate Investing Course for Profits in Investing
Real estate Investing course reveals proven real estate Investing strategies using Lease Options and Creative Financing where you can earn big money Investing in real estate with no down and no credit
-
Make money stock trading, day trading, Investing and trading options like the pros!
Turn $200 into $4,630 in 30 days by trading options online from your home PC. Step by step instructions for novices or investment pros. Make money stock trading, day trading, Investing and trading options like the pros!
-
Make real money Investing in real estate by Lou Vukas
Lou Vukas gives you the insider secrets to making real money in real estate regardless of your credit, finances or location at realestatefortunes.com.
-
Real Estate Investing
eBook on Real Estate Investing and Real Estate Marketing