What does it mean to roll an option?
Rolling is buying back the option contracts previously sold and selling new ones with a more distant expiration date 1: at the same strike (rolling out), a higher one (rolling up and out) or, for a put, a lower one (rolling down and out) 1. The roll can bring in money (a net credit) or cost it (a net debit) 1. It is two trades, often sent together as one order, and each leg has its own bid-ask spread 2.
100 shares bought at $50, and a $50 call sold 25 days ago for its model price with 30 days left, at 30% implied volatility (made-up numbers). Five days from expiry the stock has risen: move it, and choose the call to roll into.
In numbers
By the formula the $50 call sold for $1.80. With 5 days left and the stock at $53, buying it back costs $3.06: $3.00 intrinsic value and $0.06 time value 3. Selling the $52 call with 35 days left brings $2.61 3, so the roll is a net debit of $0.45. Counting every premium, the position has now collected $1.35 a share; the most it can make is $3.35, if the stock is above $52 in 35 days, and it breaks even at $48.65 1 4.
Why someone rolls
In the Montréal Exchange's example the stock is above the strike five days before expiry and the writer, rather than be assigned, rolls to a later date and a higher strike, raising the most the trade can make and its break-even 1. Rolling out at the same $50 strike brings a credit of $0.86 instead in this example 3, and keeps a strike the stock is already above.
What this shows, and what it doesn't
Model prices with implied volatility held still, before fees and two bid-ask spreads. A short call can be assigned on any day before the roll is done 5; a roll is a choice, not a repair, and a debit paid is money spent whatever the stock does next.
Go further
Sources (5), checked 20 October 2026, 27 October 2026 and 28 October 2026
- Bourse de Montréal, “Rolling an Option Position” (advisers' bulletin, May 2013). Read it (read 28 October 2026)
- US Securities and Exchange Commission, Investor.gov, “Types of Orders”. Read it (read 20 October 2026)
- Fischer Black and Myron Scholes, “The Pricing of Options and Corporate Liabilities”, Journal of Political Economy 81(3), 637–654, 1973. Read it (read 20 October 2026)
- The Options Industry Council, “Covered Call (Buy/Write)”. Read it (read 27 October 2026)
- FINRA, “Trading Options: Understanding Assignment” (14 December 2020). Read it (read 27 October 2026)
Now try it on a scenario of your own
Pick where a simulated stock might be, and by when: drag one dot and see, side by side, what buying shares, one option, or a pair of options (a call or put spread) would each do. Free, no sign-up.
Check a trade before you make it →