Definition
Roll Up / Roll Down
Rolling up or down moves an option position to a higher or lower strike, usually to lock gains or defend a tested position.
Rolling up shifts a position to a higher strike (closing the current option and opening a higher one), often to take profit and re-establish upside, while rolling down shifts to a lower strike to follow a falling market or defend a short call. Both reset the position's risk-reward at a new level.
Indian option traders roll up or down as an adjustment on Nifty, Bank Nifty, and stocks — for example rolling a tested short strike further away from the price to stay out of trouble before expiry. The roll's cost or credit must be weighed against the improvement in the position.
Related terms
- Adjustment (Options)An adjustment is modifying an existing option position — rolling, adding, or hedging legs — to manage risk as the market moves.
- Calendar RollA calendar roll moves an option position from a near expiry to a later one to extend the trade and reset time decay.
- Strike SelectionStrike selection is choosing which option strike to trade based on delta, cost, probability, and the desired risk-reward.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.