Let us say we write options strategy on indexes.The strategy makes a loss in a month . What are the best ways to rollover a losing option? Say I wrote a put spread for discussion. Rollover options 1) buy a call on expiry 2 )Buy a lower call and sell ATM 3)long future is risky BTW this is trading not to lose. Any other suggestions , where risk is limited? . http://www.1option.com/index.php/gl..._for_a_credit_a_down_and_out_option_strategy/ I only write limited risk options , then rollover , for buying the instrument at lower price. Let us I wrote a dax 10700 put and received 200 , price expires at 10400 , I rollover and collect premium on 10400 or 10300. Who has written ADVANCED STRATEGIES FOR OPTIONS , thinking outside the box?Which one of you can teach me advanced option trading or write a book?
Rolling over a losing position so "as to not take a loss" is an illusion. "Rolling over" is nothing more than closing an existing position at a loss and opening a new one.
Rolling is a psychological trick. You could roll to a far away month for a price where if the stock drops below the original strike price, you will not lose money. For example, initial call was sold at strike 100 for 5. Stock is now at 120. Call 4 month away for strike 105 is sold for 21, so if the stock retraces to 100, you didn't lose any money compared to if you sold another call at 120 for 6. You also get to keep all the premium. The downside is the money tied in the "no lose" trade is earning next to nothing and if the stock keeps going up, your losses will keep increasing. As MTE said, it's the same thing as closing and opening a brand new position. Rolling is just a way to shuffle the numbers around to make it easier to sleep at night. There's no magic here.