Best Practices

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Management After Rolling

Best Practices

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

When establishing a new position it is easy to calculate profit targets. We simply take a percentage of the max potential profit for a credit trade and set that as an exit point. After rolling, the calculation may become confusing. This is because, generally, an additional credit is collected, and the price of the position will change.

After rolling, we generally manage at a profit equal to 50% of the initial credit. Our exit price depends on our overall credit and our profit target in dollar terms. If you are looking to improve you trade management skills this is definitely one you do not want to miss!

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