When to Roll Options: Profit Targets, Stop Losses, and Rolls

When the strike was breached, S&P 500 short puts survived half the time, while short calls were salvaged in just one out of every four tests.

Dorian

Selling an option is only the first step.

The credit is fixed the moment the trade fills, the risk keeps moving: the price drifts toward or away from the strike, expiration draws closer everyday, and implied volatility changes. As long as the trade stays open, the trader faces the same choice again: take the profit, hold, cut the loss, or roll opt…