All rollovers are NOT the same when you Sell Options

What are rollovers?

You BUY back an option that you sold and then you SELL another option at a different strike price and/or expiry

Here are a few different types of rollovers

👇👇👇

🧵

#OptionsTrading #Optionselling
Forced Rollover

Your option is already at a LOSS

Your option is about to be called or assigned

But you don’t want that

So you are FORCED to roll it over to the future at the same strike price or higher

Example: $AAPL Image
The price of $AAPL is above the strike price of the call option

To prevent my shares being called at a value below my strike price I ROLLOVER the option

I kept the same strike price and only went out by a week

I could have chosen a higher strike and more distant expiry
“Get-your-shares back” Rollover

The point of this rollover is to just get your shares back before the expiry

Option would have expired worthless but you buy it back for a $1 or $2 or $5

So you can take advantage of a good time to sell another option in the future

$TSLA… twitter.com/i/web/status/1… Image
The 4/14 $187.5 would have expired worthless

But on the day of expiry $TSLA was up and the premiums for the following week were juicy because of the earnings

So I wanted to get my shares back before expiry so I could sell another call for next Friday

Capture weekend time decay
“Get-extra-premium” Rollover

Your option is going to expire worthless if you keep it till expiry

The current price is a LOT higher/lower than your strike price

So you feel a bit adventurous and roll up/down your strike price for that option

Same expiry and more premium

$TSLA… twitter.com/i/web/status/1… Image
This particular type of roll up/down in strike price is adding RISK

For that extra risk you are getting more premium

You are INTENTIONALLY moving the strike price closer to the current price

Still in the safe zone but slightly more unsafe than your previous strike

Get more 💵
To summarize:

Not all rollovers are created equal

Not all rollovers are a losing trade

In fact some are done to make the NEXT trade a bigger winner

Some are done to add more cash

Some are done out of desperation

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More from @wealthcoachmak

Apr 23
Looking to sell Options?

Like Covered Calls or Cash Secured Puts?

Then knowing the Greeks can help you make more informed decisions

The Greeks are a set of metrics that measure different aspects of options contracts

A brief thread 🧵 on the Greeks

👇👇👇

#OptionsTradingtwitter.com/i/web/status/1…
What is Delta?

Delta measures how much the price of an option changes in relation to a change in the price of the underlying asset

A high delta means the option is more sensitive to changes in the underlying asset's price
What is Theta?

Theta measures how much the price of an option declines as time passes

It's also known as the "time decay" of an option

A high theta means the option's value will decrease rapidly as time passes
Read 7 tweets
Apr 22
A thread 🧵 about $AAPL Covered Call that didn’t work out as I had hoped

There are risks with selling options that need to be understood

As they say “No Free Lunch”

But…

Even trades that go against you can be managed and maneuvered

👇👇👇

#OptionsTrading #Optionselling
I sold an $AAPL Covered Call on 4/10:

- 4/14 $162.5C
- Premium: $115

$AAPL was around $159 at that time so this was a higher than usual risk that I took by selecting an aggressive strike price Image
The risk materialized and $AAPL reached ~ $165.2 by expiry

I rolled over the call to 4/21 just prior to close on 4/14

Same strike price

Premium: $95

It was a risk by rolling over in the money but I was willing to be patient Image
Read 7 tweets
Apr 22
Option Sellers make profits more frequently but they earn small amounts every time

Option Buyers earn larger profits from each winning trade but they win less frequently

Which options camp 🏕️ do you lean towards?

👇👇👇

#OptionsTrading #optionbuying #Optionselling
Agree with this assessment about option sellers and option buyers?
I am in Option Sellers camp 😀

Buying options occasionally but mostly staying with selling
Read 4 tweets
Apr 22
$DDD Covered Calls have been good to me

My Cost basis on 2800 $DDD shares: ~$6.5

I started selling Covered Calls on these shares on Oct 19, 2022

I earned $2296 in 6 months

$2072 out of that was in first month

A thread 🧵 on how

👇👇👇

#OptionsTrading #Optionselling
First Covered Call sold on $DDD on 10/19:

- 10/28 $9 x 28 lots
- Premium: $420

Call expired worthless

Then:

- 11/4 $9.5 x 28 lots
- Premium: $168

Rolled DOWN to 11/4 $9
Premium: $196 ImageImage
The 11/4 $9 Call expired worthless

Sold another call on 11/7

- 11/11 $8.5 x 28 lots
- Premium: $728

By 11 $DDD spiked from $8 to $10

I rolled over the call to 6+ months out:

- 5/19 $11 x 28 lots
- Premium: $560

Total earned so far: $2072 in < 1 month ImageImage
Read 6 tweets
Apr 22
🚨$AMC Cash Secured Puts 🚨

Total CSPs sold: 4

A brief thread 🧵 on all:

👇👇👇

#1:

- 3/17 $2P x 10 lots opened on 2/14
- Closed on 2/27
- Net Premium: $330 - $50 = $280
- Risk: $2000

Return: 14% in 2 weeks

Annualized: 364%

#OptionsTrading #Optionselling ImageImage
#2: $AMC

- 1/19/24 1P x 15 lots opened on 3/2
- Still OPEN
- Net Premium: $390
- 15 lots out of 20 filled (other 5 cancelled)
- Risk: $1500

Return: 26% in 10.5 months

Annualized: 31%

A long dated order risking $1500 ImageImage
#3: $AMC

- 5/19 $2P x 5 lots opened on 3/15
- Closed on 4/21
- Net Premium: $170 - $15 = $155
- Risk: $1000

Return: 15.5% in 5.5 weeks

Annualized: 146%

#OptionsTrading #Optionselling ImageImage
Read 5 tweets
Apr 21
A brief thread 🧵 about trades that didn’t work this week

Some were not expected to be winners right away but still counting them here

None were spectacularly bad 😎

👇👇👇

$AAPL $JNJ $TSLA

#OptionsTrading #Optionselling
A rollover of $JNJ Covered Call

- 4/21 $160C

When that trade was made (a rollover from previous week) $JNJ was at $166

$JNJ came down after earnings but not enough

So this one remains in the rollover “jail” ImageImage
$AAPL rollover

- 4/21 $162.5C

$AAPL is pretty much holding the market

It did come down some this week but not enough for the sake of this call

So rolled again today ImageImage
Read 4 tweets

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