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Futubull Options Sir

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Option rollover strategy — the perfect balance of risk and profit

Cow friendly, I am an option sir.

Each year, January and February are the time when large companies compete to publish their results. It is also a good time for options traders to capture opportunities.

Today, asir wants to share with you the risk management tool for performance options trading: option rollovers.

Full text: 2500 characters
Suitable people: Options parents, interested mooers in futures trading
Main content: a. the principle of option rollover
b. Buyer reversal cases in a floating position, buyers' reversal cases in a buoyant position

1. What is turnstile

The rolling stock is also called the rolling option in English.

As the name implies, break the current option and open a new one. Achieve the goal of reducing risk or expanding profits through the transfer of positions.

Futubull is online with the transfer function.

We can click the [Reposition] button in [Holding], select the appropriate [Turnover Type], click to place an order to transfer [Existing Position] to [New Line Option Price or Expiration Date].

The feature is expected by a large number of mooers, and our product manager will quickly respond and bring them online.

Previously, it was necessary to perform two operations manually, which was not only a hassle, but it could also cause price slippage.

And now, once online, the feature brings the following benefits:

One-click turnstile:With just one click, you can sell and buy at the same time

Flexible Control:Supports single leg rotations, supports partial leg rotations in the combination, and also supports full leg rotations in the combination

Best Deal Price:Two orders are traded at the same time, smooth operation, reducing the risk of spreads that may be introduced by manual operation

Reduce the risk of slippage:Automatic operation of the system reduces the risk of price changes

Depending on the operation, turnstiles mainly come in three forms:

Upward Rotation:Close the current options contract and open a new option with a higher option price.

Downward Rotation:Close your current options contract and open a new option at a lower option price

Reverse Shift:Close the current options contract and then open the new option later than the expiry date

EACH TURNAROUND METHOD HAS ITS OWN UNIQUE SCENE AND PURPOSE. Choosing the right turnround strategy will allow us to better control the trade.

In the experience of the market, a seller turnover in a floating state and a buyer turnover in a floating state are two good ways to manage risk.

Let us take the opportunity of Ezra, for example. If you do not get any investment advice, please note to all mooers!

Second, sellers in a floating state of loss

Suppose you forecast a fall in the share price before Tesla releases its results, so you sell a call option. But the share price then rose, facing potential executive risks.

If you're still bearish and expect stock prices to fall a month later, a proper reversal strategy might help you reduce your losses:

Idea 1: Upward Shift

1. Close the position first: Buy back previously sold options and lock in losses. Even if the share price continues to move in an unfavorable direction, losses will not continue to increase.

2. Re-open the position: Then, sell new options with a higher price of the outstanding option.

IDEA 2: UPWARD+BACKWARD PIVOT

1. Close the position first: Buy back previously sold options and lock in losses.

2. Re-open positions: Sell new options with a higher price and a longer maturity date.

With the above reversal operations, it pushes the option price higher, pushes the expiration date away, and takes advantage of the extension of time and space to increase the winning rate.

You get more options money, which reduces the risk of buyer overriding. For Call, the lower the bond price, the more expensive the option gold, the more expensive the maturity date.

Both of these ideas can be traced back to which one to choose, depending on your investment objectives and your judgment of future trends, and avoid blind reversals.

It should be noted that only when you believe Tesla stock price will fall, an up+a backward turn is the right choice.

If you are selling a put option and the market continues to fall and you face a risk of loss, you may consider a downward reversal to reposition your existing high bank option to a lower warrant price. The execution idea is the same.

3. Buyer turnover in a buoyant state:

Suppose you expected Tesla's stock price to rise before the results were released, so you bought a call.

Tesla actually posted a performance that exceeded expectations. As the stock price rises, the value of the call you bought increases with it.

Faced with this situation, you may be confused about whether to sell options now to lock in profits or to continue to pursue higher returns.

At this point, consider using a reversal strategy to find a balance between the two.

Method 1: Upward rotation

1. Close the position first: Sell this call and lock the profit.

2. Re-open the position: Use the profit obtained to buy a call with a higher stock option price.

Method 2: Upwards+Backward Rotation

1. Close the position first: Still sell this call and lock the profit.

2. Re-open the position: Use the profit obtained to buy a new call with a higher stock option price and a longer maturity date.

Upward rotation allows you to increase potential gains at a lower cost, improve your utilization of funds, and enjoy greater options leverage.

Even if the newly purchased option eventually expires, you still retain a portion of the profit.

Reversing a position backwards allows you to wait longer for the stock price to rise in order to reap greater returns. It also avoids the huge swings that come with all the Big Gamma, reducing the risk of option expiry.

But be aware that options that are further along the expiration date are usually priced higher, so this may reduce your underlying profit.

Of course, if you want to get a bigger profit and loss by buying a put option, then you can consider a downward reversal.

Fourth, what risks do you need to pay attention to in option rollover?

1. Whether or not to reverse positions depends on your investment objectives and your judgment of future trends, do not blindly shift positions

2. The rollover function is one of the tools commonly used by experienced options traders. If you are still new to options, please evaluate your situation and use it after

3. IT IS NECESSARY TO CONSIDER THE COST OF TURNAROUND AND THE COST OF COMMISSIONS (FLAT AND CHARGED ACCORDING TO TWO ORDERS)

5. According to different purposes, Asir also organized several situations to share with everyone:

Objective 1: To increase profitability

Ideal for use in one-sided transactions, such as a continuous rise or fall in the market.

Increases option leverage (for example, for call, and for downshift, for example), increases capital efficiency and increases profits by converting real value options to notional options.

But be aware that doing so increases the risk, so allocate funds carefully and consider a partial rollover to a light notional option, rather than shifting all to a deep denomination.

Objective 2: To reduce losses

Ideal for use in shocking situations or in situations that are contrary to expectations.

For option buyers, when the market is in a crosshairs state, it is possible to reduce the loss of time value by converting a dummy option to a real value option (such as Call for a downshift, for example, and a put).

For options sellers, when things go the opposite of expectations, they face great uncertainty and even huge losses, at which time they can reposition into contracts with other benchmarks, hedging the current risks.

Objective 3: To reduce the risk of option expiry or exercise

For option buyers, when a current option contract expires in the month, it means that the time value is nearing zero, at which time the option is reversed, can achieve the effect of the contract exhibition period, thereby extending the time value of the option and reducing the risk of expiry of the option.

For options sellers, if the option is close to the day of execution, due to high volatility and insufficient margin of the seller, leads to hedging or strengthening, and the risk of extended losses or forced closing can be avoided by repositioning.

The above is today's share, and welcome all you cow friends to forward three series with one click. If you have any questions or want to know more, please leave a comment in the comments area and I will be happy to share more for you.

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Risk Disclaimers

This article is for informational and educational purposes only and does not recommend any specific investment strategies. Content is general, strictly for educational purposes and may not be suitable for all investors. The above does not take into account the financial situation, investment objectives, investment time frame or risk tolerance of individual investors. Before making any investment decision, you should consider your personal circumstances and associated risks.

Any examples provided herein are for illustrative purposes only and are not intended to reflect the investment results that any investor can expect. Options trading involves significant risks and may not be suitable for all investors. Before participating in any options trading and implementing any options trading strategy, investors must consider the characteristics and risks of options trading and consult professional investment advisors when needed.

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