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If you’ve ever entered a covered call and watched the stock price shoot to the moon, you understand the frustration of feeling locked into capped profitability. But you aren’t stuck in the original trade.
You can roll a covered call position to adjust your payoff and unlock more upside on the shares. To do this, you buy back the original short call and sell a new call in a later expiration and higher strike price. The roll can collect a bit more credit (or a lot in some cases), and increase your short strike dramatically.
In this video, I introduce the covered call roll map to show you how you can roll for a credit, how you can unlock substantially more appreciation in the shares, and the downside of rolling far out in time. I use the Option Modeler on projectoption to visualize exactly what this process looks like, step by step.
==== Video Chapters ====
00:00 Introduction
00:25 Quick covered call explanation
01:39 What is rolling a covered call?
03:00 The Covered Call Roll Map
05:19 The downside to rolling far out in time
06:56 Using the Option Modeler to visualize covered call roll adjustments
11:01 Rolling deep ITM call options
13:34 Beginner resource for learning options essentials
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Disclaimer: Nothing contained in our content constitutes a solicitation, recommendation, promotion, or endorsement of any particular security, other investment product, transaction, or investment. Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involve substantial risk of loss and are not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not necessarily indicative of future results. I am not a financial advisor. The ideas presented in this video are for entertainment purposes only. You (and only you) are responsible for the financial decisions that you make.
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