Rolling (Roll Down and Out)

Rolling is a defensive and offensive maneuver used to manage trades. In the wheel strategy, if a cash-secured put goes in-the-money and you want to avoid assignment, you can "roll" the position.

This involves buying to close the losing put, and simultaneously selling to open a new put with a later expiration date (rolling out) and usually a lower strike price (rolling down). The goal is to perform this maneuver for a "net credit," meaning the premium collected from the new option pays for the cost of closing the old one, putting more cash in your pocket while buying more time for the stock to recover.

Rolling a Covered Call: You can also roll covered calls up and out when the stock is about to be called away but you want to retain your shares. Close the current CC and sell a new one at a higher strike and/or later expiration.

Infinite Roll Risk: Beware of endlessly rolling a position lower on a fundamentally deteriorating stock. Rolling does not fix a bad stock pick — it only delays assignment while the stock may continue falling.