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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: alanrs who wrote (5138)	4/11/2011 3:09:07 PM
From: lml	Read Replies (1) of 5205

you close a current position (either by buying or selling) and then open a new position (either by selling or buying) at a different expiration or strike. It's two different transactions, . . . You can roll over a covered call position in a "single" transaction by entering a spread order rather than "buy to close" followed by a "sell to open" order. Granted, a spread order represents "two different transactions" as you state, it eliminates any price risk that may occur between the "buy to close" fills and the "sell to open" is entered. To original poster, nothing is automatic with respect to rollovers. You might be referring to option assignment, which occur on or any time prior to expiration should your option trade "in the money," that is, when the underlying equity security trades above the option exercise price. Rolling "out" options positions to a later maturity, or rolling "up" (or down) to a higher (or lower) exercise price, are good strategies for managing risk that holding options short or long present to your trading portfolio. Hope this helps some.

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