How to use the roll calculator
- Enter the current stock price.
- For the current call: the strike, the price you sold it for, what it costs to buy it back now (the ask) and the days left.
- For the new call: the strike, the price you can sell it for (the bid) and its days to expiration.
- Compare the four choices in the table and read the notes below it.
What rolling a covered call means
Rolling is two trades done together: you buy back the call you sold and sell a new one, usually with a later expiration and often a higher strike. Traders roll to avoid having their shares called away, to collect more premium, or to move the strike up after the stock has risen.
Roll up, roll out, or both
- Roll out: same strike, later date. Usually a credit, because the new call has more time value.
- Roll up: higher strike, same date. Usually a debit, but it adds upside if the shares are called away.
- Roll up and out: higher strike and later date. The most common choice when the stock has moved above the strike.
Profit captured and the 50% rule
Profit captured = (price sold − buyback price) ÷ price sold. When most of the premium has been captured, the little that is left is not paid for much longer exposure. Many option sellers close or roll once 50% to 80% of the premium is captured instead of waiting for expiration.
Time value per day
An option's price is intrinsic value plus time value. As an option sold by you nears expiration, its time value shrinks and so does what you can still earn by holding it. The calculator compares the time value per day left in the current call with the new call, so you can see which earns more for each day you keep the position.
Things to watch
A roll for a debit costs money now. A roll does not turn a losing call into a winner: it moves the position. With American-style options, an in-the-money call with little time value can be assigned early, especially before an ex-dividend date. See also the covered call calculator and the wheel strategy calculator.
Frequently asked questions
When should I roll a covered call?
Common triggers are: most of the premium has been captured, the stock has moved close to or above the strike and you want to keep the shares, or expiration is near and you want to keep collecting premium.
Should I roll for a credit or a debit?
Most traders prefer rolling for a net credit. A debit can make sense when the higher strike adds more potential gain than the cost of the roll.
What does profit captured mean?
The share of the original premium you would keep if you bought the call back now. Sold at $1.20 and buy back at $0.30 means 75% captured.
Does rolling avoid assignment?
It usually does, because you close the call that could be assigned. But an in-the-money American-style call can be assigned before you roll it.
For educational purposes only. Not financial advice. Options involve risk and are not suitable for all investors.