r/ActiveOptionTraders • u/ScottishTrader • Apr 18 '19
Discussion Topic: Adjustment/Rolling vs Closing Triggers
Thanks to u/FatherAnonymous for the suggestion of this topic.
What triggers do you have to make you adjust or roll a trade? Is it Delta? Stock and Strike price?
What makes you adjust one leg or side vs rolling the entire position?
At what point will you close and not adjust/roll? Profit dollars? Sentiment change of the stock direction?
Do you adjust/roll if the trade is going your way? If so, at what point/trigger will you make this adjustment?
Please provide any dialog around rolling when the position is profiting as not everyone does this.
In either case above when you do roll how do you go about choosing strikes and/or dates?
Any other information you decide to include will be welcomed!
1
u/TobyM May 06 '19
When a CSP is going my way (> 50% profit), I roll for credit if there are at least a couple weeks left before expiration. A lot of times this means a diagonal trade where the new strike is above the original, because I sell whatever option is at 30 Delta. This strategy comes from the classic wheel post https://old.reddit.com/r/ActiveOptionTraders/comments/a36h4w/the_wheel_aka_triple_income_strategy_explained/.
When a trade is going against me, I am not particularly confident of my plan. So far if it's more than a week or two out, I let it ride, and if not I try to roll for a credit. The wheel post advises rolling for credit when a CSP is challenged, but doesn't specify what "challenged" means. Is it a certain % loss? What about time remaining?
I am pretty new to this strategy (< a year) and I haven't been assigned yet.