Roll out, down, up
Definition · Level 3 · Spreads & short options
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Out is to a later expiry, down is to a lower strike, up is to a higher strike. A short put under pressure rolls down and out; a short call under pressure rolls up and out.
Example
“Rolled the 50s down and out to next month’s 49s.”
Where Tradecraft teaches it
Level 3 · Spreads & short options, in the lesson “Rolling and defending”: Rolling out, down and up; rolling for a credit; and when to close instead.
Related terms
- Roll for a creditRepositioning a short option where the new contract brings in more premium than the old one costs to buy back, so you are paid to add time or move…
- Back-spread danger zoneWhere a back spread loses the most at expiry: the stock sitting at the long strike.
- BodyThe middle strike of a butterfly, short in a long fly: where a long fly earns the most at expiration.
- Breakeven win rateHow often a trade must win just to net zero, treating each outcome as a full win or a full loss: max loss ÷ (max profit + max loss).
- Broken-Wing ButterflyA butterfly with one wing pushed out: buy one call, sell two, and buy one much further away, so the two wings are different widths.
- Broken-wing condorA condor whose two wings have different widths, e.g. an iron condor with a 5-wide put spread and a 10-wide call spread.