csmith1521
Member
Long time lurker, first time poster. I just got myself out of a very bad trade that took ~3months to recover from. These posts are gold. Thank you!TSLA Rolling - does it work? Part 3
Compared to puts, calls take longer to OTM if rolled
if my 7DTE short call is breached, (for ex 2023-06-09 i have a 10% OTM bet -c235.36 but it closed at 244.39):
if one is selling 10% or 12% OTM calls, any breached call will take at most 6 rolls before it goes OTM (5-strike improvement every week, total $30 improvement) ie move -c200 into -c205 into -c210 into -c215 into -c220 into -c225 into -c230
- if i roll with no strike improvement (assuming no early assignment), i can close it in 10 weeks; this means rolling to the same strike 10 times
- if i roll with 5-strike improvement every week, it will go OTM in 3 weeks (week 1 -c240.36, week 2 -c245.36, week 3 -c250.36); this means rolling 3 times and going up total 15
- if i roll with 10-strike improvement every week, it will go OTM in 1 week (week 1 -p245.36); this means rolling 1 time and going up total 10
if one is selling 15% OTM calls, any breached call will take at most 2 rolls before it goes OTM (10-strike improvement every week, total $20 improvement) ie move -c200 into -c210 into -c220
if one is selling 8% OTM calls, there is a 15.82% chance that it will go ITM.
summary:
- rolled puts go OTM faster than rolled calls, especially if there is a 5- or 10- strike improvement every week
- assuming no early assignment, there is no "max loss" when rolling puts - 100% will eventually go OTM (since 2021)
- assuming no early assignment, "max loss" is possible when rolling calls
- "max loss" means you can roll up to today or for a long time, and it will still be ITM (might as well take the loss)
- translation: i should be more afraid of rolling calls than puts
View attachment 1009633
View attachment 1009660
What's your trigger to roll your calls/puts? I have guidelines that I follow for entering trades, but am having a difficult time coming up with guidelines for when to roll.
Thanks!