Been trading for a while but still have trouble rolling options when they go against me.
I have tried it a few times but ended up losing more money than just taking the loss. Maybe I am timing it wrong or picking the wrong strikes.
I am curious about what works for others in this situation.
Made this mistake three times in my second year until I figured out my rule.
Only roll when I can collect more premium than what I’m losing on the current position. Otherwise it’s just throwing good money after bad.
Last month I had puts on Apple that went south. Instead of rolling for a debit, I closed them at 40% loss and moved on.
Never roll more than once on the same position, learned that lesson hard.
Timing really matters when you decide to roll. Most people wait too long and try to save a position that’s already gone bad.
The key is looking at whether you still believe in your original trade idea. If the stock fundamentals changed or you think you were wrong about direction, just cut the loss.
When rolling does make sense, try to get at least 30 days of new time value. Rolling weekly options into weeklies usually doesn’t give you enough time to recover.
Rolling works best when done early, not when your position is deep underwater. Do it before expiration while there is some time value left to work with.
Choose strikes that give you a net credit or at least break even on the roll. If you end up paying a large debit to roll, it’s better to take the loss. Many traders make the mistake of rolling too late when they start to panic.
Only roll if your original thesis is still valid. If the market direction has changed and you were wrong, rolling turns one bad trade into two.