Hello everybody, I have a little assignment to do about rolling option contracts. The question is quite simple: When is it best to roll an option thatâs deep in the money if the market is going to keep going down, let me be more precise. ** Case nÂ°1 : We are short puts 47 June, the stock is currently trading at 46.5. To roll to the next month we want to buy the June 47 put at $0.80 and sell the July 45 put at $0.65. The cost of rolling is therefore $0.15 (80-65). Now the market drops to 44.5; The July 45 put is now worth $1.60. ** Case nÂ°2 : We are short puts 47 June, the stock is currently trading at 46.5. The stock drops at 44.5. We now decide to rollover and the 47 put is now worth $2.50 and the 45 put July is at $1.60. The cost of rolling is therefore $0.90 (2.50-1.60). So I have done all the pricing of different options but Iâm stuck on one thing. It could seem like itâs more profitable to roll when the market trades at 46.5 in case 1 since it costs $0.15 compare to rolling at 44.5 when it costs $0.90. BUT, should I take into account the fact that the 45 put july sold at $0.65 and now worth $1.60 is a shortfall. Since we rolled when the stock was trading at 46.5 and it is now at 44.5. **In case 1 letâs say we start with equity of 1000 1000 of equity -15 for the cost of rolling 47 to 45 = 985 -160 since the 45 has risen in value (thatâs the part im not sure) = 825 with the market trading at 44.5 ** In case 2 we also start with equity of 1000 1000 of equity -90 for the cost of rolling with the market at 44.5 =910 since we sold the put 45 with the stock trading at 44.5 there is no loss at this point. Would you say it is best practice to take into account the shortfall incurred by the put 45 in case 1 in order to work out the profitability of the roll? It would be great if you could help me with this.