Rolling the Dough! ๐ค๐ค๐ต๐ต Tutorial | What is a roll?
Hey mooers!
Hope you are doing fine. Instead of a Technical Analysis discussion, I was thinking I should change a little bit and talk about options series. ![]()
With the crypto rally coming in and I do hold a certain amount of $MARA Holdings (MARA.US)$ with a Covered call, It had break beyond my 18 strike price. ![]()
Thinking I may missed the opportunity, I have a few decision to make. ![]()
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Before I dive in,
โ Disclaimer: All discussion here is based on my own opinions. Please do your Due Diligence and make your own studies. This is for education purpose and not for the intention to recommend a buy or a sell.
Now let's continue on with the decisions. ![]()
1. I could just leave it to expire
By leaving it to expire, I am telling myself that this is the cap that is going to be and it will not go beyond the strike price for the time being and I would be able to buy more shares at a cheaper price. ![]()
In other words, locked in profits! ![]()
2. I can start rolling the options to sell time of covered calls. And wait for the next level of price to go up. In other words I am bullish! ๐
The reason and rationale I had decided to roll my options instead of leaving to expire and placing a cash secured put is $Bitcoin (BTC.CC)$
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Currently Bitcoin ![]()
is about to trade in an ATH again and showing strong RSI momentum as well as a MACD above golden cross. If this coin continues to go up, it will affect crypto mining โ such as $MARA Holdings (MARA.US)$ and $Coinbase (COIN.US)$ and crypto holding companies such as $MicroStrategy (MSTR.US)$
Basically there are 4 types of rolling strategies
More details from tasty live about options rolling.
So here are some of my rationale of 2 types of roll which I am currently doing now.
1. 100 units of MARA to roll out ![]()
The reason for this is that I have plans that within the next 1 week, I may see a pullback down in the short term and decides to place a cash secured put. While waiting for that to happen, I decided to wait for a later time and roll the options to the next 18. If in circumstances it goes bearish, I can let it be sold off and ready myself to buy a cash secured put in the next week.
This is called a Calander spread strategy. ๐
What is a Calander spread? Simple answer, a Calander spread is just selling more time in hope to get more premiums ![]()
while waiting for the shares to drop back to the same price.
More details below in investopedia ![]()
.
2. Roll up a covered call with a longer time frame. ๐
The reason for this strategy and rationale is that i believe in the long run, $MARA Holdings (MARA.US)$ may have a potential to go higher to 20 strike price in 3 weeks time. I decided to place a higher covered call so I could gain from the alpha ie capital gains in 3 weeks. ![]()
More details here in investopedia:
So when should I roll options๐ฅ?![]()
The most crucial thing about rolling option is this. Always get a credit return! ![]()
The reason for this is that a credit return is because you would like to reduce the risk of losing. If you decide to go for a debit, it is likely you are raising your risk and start losing money. ![]()
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If you are placing a covered call, you roll the options if you think the price will go higher in the long term and a pullback in the short term.
If you are placing a cash secured put, you are thinking that the price may go down further in the long term and price will be bullish in the short term.
Alright I would end my tutorial here. Hope you have a wonderful weekend. May your trades be ever in your favour. ๐ฅ
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Casual and Social ๐ฑTrader and investor. โ
chartist for Trades โ
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Aaron Invests (AI) OP : If anyone is interested to join discussion about TA and Scalping opportunities. Feel free to join discussion in my group.
Join us in the group chat Scalp and TA Discussion.
All Also Taken : have you actually made a study? I'm interested to know whether doing this beats the risk-free rate, also does it beat working part-time in a restaurant?
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
I've actually made a study of very safe covered calls (indexes and utilities) but I don't know where to post it or how to post it since I don't have the desktop
Aaron Invests (AI) OP : Not entirely 100% risk free. I am doing this on an experimental basis. What I am doing right now is what is working for me.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
I might be experimenting on other strategies like covered call and buy put strategy as a strangle if I am really certain that it will go bearish 
but wanted to preserve the stock . Have fun experimenting each trades ![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
by making a paper trade. Is an ever learning journey.
Greenhorn Dav : haha
Aaron bro this is too complicated for my comprehension
DAPPER DON : love this
Aaron Invests (AI) OP Greenhorn Dav : I would try to make it simple. Thanks for the feedback.
Jernane Coleman : Just get in to this so walking
liquidityHunter : i would consider the implied volatility for hedging. if the IV is high it means options are expensive, so i would prefer to short/sell. if IV is low it means options are cheap, so i would prefer to long/buy.
Hermes24 : though I didn't understand much being a newbie, I really appreciate you're sharing this.
Aaron Invests (AI) OP Hermes24 : This is more of an intermediate strategy. For Beginners learn the 4 basics of options first.
Buy call, sell puts = bullish
Sell call, buy puts = bearish
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