"ROLLING STRATEgIES"

[buybig]

anyone have a good breakdown of viable rolling strategies?

I trade options only so no hedging w/ underlying..

understanding this is an adavnced concept... are there any simple rules of thumb? a current thread running on ET made me wonder..

for example: profitable bull put spread rolled to an iron condor or a ladder..

xyz profitable--> do a, b, or c, to lock in profit.

xyz losing--> do a,b,c, to break even or hurt self more.


thx

 

[traderTX]

Depends on the strategy you are using, i.e. double diagonals, calendar spreads, combos, etc. Obviously if you buy any of these for a debit...you want to roll enough to offset the debit and put premium in your account! Having stated the obvious, I need you to clarify....are you asking what to look for for an entry into a trade or how to manage one you have on, or how to even pick a strategy?? sorry but I'm a little confused

 

[buybig]

trades on..

its a loss/gain.. how to repair/lock in?

diagional - do XYZ out
vertical - do XYZ out
condor - break leg 1
short straddle - to iron fly

very general question.. looking for rule of thumb..

if xyz then abc typically
if def then uvw typically

etc..

just basic damage control or profit retaining rolls

 

[traderTX]

snuggle: wow you've actually asked a lot when just asking for a "rule of thumb". Let me start by recommending the book "Options Trader Handbook Strategies and Trade Adjustments". Thats a good read. I will focus in on my favorite spread...the double diagonal....same principles can be used on calendars though. When looking to roll you want to see how much "hedging" value your short options have left in them for your back month longs.....obviously you'll want to roll when the roll has the greatest value, but this may not be when the short option is worth the least, you also have to factor in volatility in the next month's options. Basically, you want to be able to initiate a roll that will leave as wide a window for price in the next month as possible...but there is no rule of thumb for this as volatility is a factor......as far as the makeup of a dbl diagonal, it is meant to eventually be rolled into an IC in the back month, however, as you approach this month it may be better to simply sell out or if the price has moved heavily in the favor of either your put or call, sell the opposite one, and roll into a vertical (for example if your long strike is now considerably ITM. I'll stop there b/c I don't know if I am answering your question or not.....if this is any help PM me and we can discuss different spreads further