How to roll a contract over?

W

wally_

Hi,

I have never done that and have found little if any detailed information on the Internet on how one rolls an option contract over to another month. What should I do to accomplish that. I trade with IB.

Any help would be appreciated.

Thanks,
w.
 
close one position, open another...you can usually specify a single price if you want (debit or credit)
 
Call your broker for instructions on specifically how to word the order. You should be able to enter it as a spread and place a limit price, which you should do. If you can't do it as a spread, at least use limit orders for each side. Otherwise you'll get killed using market orders. (I'm not sure if you can place spread orders on options when one side is to open and the other is to close, but I don't see why you shouldn't be able to do it as a spread).

Also, especially for futures options, have your broker call the floor for the bid/ask prices. The quotes on the screen are often hours behind.
 
Thanks for your prompt reply.

That's what I thought, but I also thought that it could perhaps be accomplished without incurring two commisions (closing and opening), but I now understand that I was wrong.

Now, what do you mean by specifying a single price? Could you give me an example of what you mean by that for say a call position if that applies here?

Thanks again,
w.
 
Originally posted by sempai
(I'm not sure if you can place spread orders on options when one side is to open and the other is to close, but I don't see why you shouldn't be able to do it as a spread).
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No reason you can't...but you do have to specify that one is to open and one to close. Has nothing to do with the price. That is for open interest reporting.
 
...thought that it could perhaps be accomplished without incurring two commisions...
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IB has a flat rate per contract. It does not matter if it is two orders.
 
Trajan:

thanks for your reply.

Now, how am I to understand that in the context of my question? Does it mean that when I roll over my call position I will not have to pay my commish twice but only once? Or do you mean that one pays only once for say a combo contract (spread, straddle, ect.) even if the contract consist of two legs?

I just would like to know. So far I have only played simple contracts (puts or calls) and a few spreads but I had to enter them as separate legs because only on ISE you can enter combos as one order, at least with IB.

Thanks,
wally_
 
Originally posted by wally_
Trajan:

thanks for your reply.

Now, how am I to understand that in the context of my question? Does it mean that when I roll over my call position I will not have to pay my commish twice but only once? Or do you mean that one pays only once for say a combo contract (spread, straddle, ect.) even if the contract consist of two legs?


Thanks,
wally_
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You will always pay two commissions (no way around that) but his point was IB has no per ticket charge, only a fee per contract, so if you roll out 10 calls (buy 10 to close sell 10 to open for example) you pay commission for 20 contracts, the same as if you just bought 20 calls in one order. Its 2 commissions, 10 and 10, but there's no per ticket charge which is a beautiful thing :) :)

I have seen brokers that advertise one commission for spreads, but its a marketing ploy don't be fooled. If you check what you actually pay, its probably more than what IB charges for 2 legs.
 
Originally posted by wally_
Thanks for your prompt reply.

Now, what do you mean by specifying a single price? Could you give me an example of what you mean by that for say a call position if that applies here?

Thanks again,
w.
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say you are short 10 July 50 calls on ABC

ABC July 50 calls 5 - 5.30
ABC Aug 50 calls 5.50 - 5.80

Spread:
Buy 10 July 50 calls close
Sell 10 Aug 50 calls open
net credit of .50
 
its sounds like you are just long a contract for one month and you want to "roll" to the next month. Really you are just selling the contract you own and buying a new one. Two seperate trasactions. Commissions vary by broker. My online broker has a button called "roll" that will do it all in one step, but it is really just two transactions that happen at the same time.
 
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