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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: smchan who wrote (2008)	10/28/2000 6:15:57 PM
From: Dan Duchardt	Respond to of 2241

Sam, "Rolling" in the context of options refers to replacing one option position with another. "Out" means to go farther out in time. "Up" or "down" means to change to a higher or lower strike price. Suppose for example you had purchased some AAPL 2002JAN25 calls before it got crushed. They may have cost in the neighborhood of $30 each, and are now worth $4.25. That's pretty painful, but you think AAPL will come back, especially if it has a bit more time, so you might "roll out" buying the 2003JAN25 and selling the 2002JAN25 at a net cost of $2.50. You might instead take advantage of the "cheap" prices and "roll down" to 2002JAN15 at a net cost of $3.875, or some combination of changing time an price like "rolling down and out" from 2002JAN25 to 2003JAN20 at a net cost of $3.75. Dan