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Rolling can get you the extra time you need to prove out your opinions, but it can also compound your losses. Stock XYZ at You earn a premium for selling the call, but you also take on an obligation: Rising stock prices are probably why the call owner exercised their right to buy anyway. When the call is first sold, your potential profit is limited to the strike price minus the current stock price plus the premium received for selling the call.

You receive a premium for selling the option, but most downside risk comes from owning the stock, which may potentially lose its value. Since the stock is now in-the-money ITMat expiration we will most likely be assigned.

If only you could buy yourself a little more time, maybe you could prove your assumptions correct and eek out a little more profit on the stock. Rolling is one way tradeking options expiration dates respond to this situation.

You can buy back and close the 90 call you sold, taking a loss on the call, but leaving you long stock with unlimited upside going forward. To do this we will enter an order to buy to close the short call and the sell to tradeking options expiration dates a new call.

The new option will have a higher strike price and go further out in time. Moving up in strike will lower the premium received for a short tradeking options expiration dates, but going out in a time tradeking options expiration dates increase the premium. The net effect, we hope, will be a credit to the account for the entire trade. Check out the example in bold below. Buy to close the front-month 90 call Every time you roll, you may be taking a loss 2.

Rolling can be useful, but you should definitely go in with your eyes wide open. Brian Overby is Sr. Options Analyst at TradeKingan online options and stock broker. Options involve risk and are not suitable for all investors.

Please read Characteristics and Risks of Standardized Options. While implied volatility represents the consensus of the marketplace as to the future level of stock price volatility or probability of reaching a specific price point there is no guarantee that this forecast will be correct. Any strategies discussed or securities mentioned, are strictly for illustrative and educational purposes only and are not to be construed as an endorsement, recommendation, or solicitation to buy or sell securities.

TradeKing provides self-directed investors with discount brokerage services, and does not make recommendations or offer investment, financial, legal or tax advice. At Connors Research, we are using it as an overlay to many of our best strategies to make them even tradeking options expiration dates -- now you can, too. The Connors Group, Inc.

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The basic fundamentals of options trading are relatively easy to learn, but this is a very complex subject once you get into the more advanced aspects. As such it's no surprise that there is a fair amount of terminology and jargon involved that you may not be familiar with.

We have compiled this comprehensive glossary of terms to be a useful reference tool for anyone learning about trading options.

Although we always try and explain any terminology we use in the context that we are using it in any particular page or article we write, there may be occasions when you come across a term that you don't understand.

This glossary of terms is here to be used if you ever require an explanation for what a particular word or phrase means. This is an advanced strategy that can be used to profit from an underlying security remaining neutral.

Learn how to use an Albatross Spread. All Or None Order: Often abbreviated as AON, this is a type of order that must be either filled entirely or not at all. A contract that gives the holder the flexibility of choosing to exercise their option at any point between buying the contract and the contract expiring.

More on American Style. Taking advantage of price discrepancies by buying and selling to create a risk free trade. Strategies that involve the use of arbitrage. Read more at Arbitrage Strategies. When the writer of a contract is required to fulfill their obligations under the terms of that contract — for example buying the underlying security if they have written calls or selling the underlying security if they have written puts.

The writer will be issued with an assignment notice in such circumstances. At the Money Option: An option where the price of the underlying security is the same as the strike price.

The process by which in the money options are automatically exercised if they are in the money at the point of expiration. A trading method that involves using a third party to select your trades and having your broker automatically execute them. Read more on Auto Trading. A type of option that is based on a group of underlying securities rather than just one. A type of option that can come into existence or go out of existence based on specific criteria is usually related to the price of the underlying security.

More about Barrier Options. This is an advanced strategy that can be used when the outlook of an underlying security is bearish. Learn how to use a Bear Butterfly Spread. A simple strategy, using calls, that can be used when the expectation is that the underlying security will decline in price.

Learn how to use a Bear Call Spread. An expectation that an option, or any financial instrument, will decrease in price. Strategies that can be used to profit from a downward move in the price of a financial instrument. List of Bearish Strategies. Bear Put Ladder Spread: This is an advanced strategy that can be used when the outlook on an underlying security is bearish.

Learn how to use a Bear Put Ladder Spread. A simple strategy using puts that can be used when the expectation is that the underlying security will decline in price. Learn how to use a Bear Put Spread. This is a strategy that can be used when the outlook on an underlying security is bearish.

Learn how to use a Bear Ratio Spread. An unconfirmed market movement which suggests a bear market, but is unconfirmed and ends up with the market moving upwards. The difference between the bid price and the ask price of an option. An indicator of liquidity, and often referred to simply as the spread. A type of option that pays a fixed return if it expires in the money or nothing if it expires at the money or out of the money. More about Binary Options.

Binomial Options Pricing Model: Read more about the Binomial Pricing Model. Black Scholes Options Pricing Model: A pricing model that is based on factors that include the strike price, the price of the underlying security, the length of time until expiration, and volatility.

Read about the Black Scholes Pricing Model. The price or price range of the underlying security at which a strategy will break even, with no profits and no losses. When the price of a security moves above an existing resistance level or below an existing support level.

The expectation is that the security will continue to move in the prevailing direction. An individual or a company that executes orders to buy and sell financial instruments on behalf of clients. The charge from a broker for executing orders on behalf of clients. This is a strategy that can be used when the outlook on an underlying security is bullish. Learn how to use a Bull Butterfly Spread.

Bull Call Ladder Spread: Learn how to use a Bull Call Ladder Spread. A simple strategy, involving calls, which can be used when the expectation is that the underlying security will increase in price. Learn how to use a Bull Call Spread. This is an advanced strategy that can be used when the outlook on an underlying security is bullish. Learn how to use a Bull Condor Spread. An expectation that an option, or any financial instrument, will increase in price.

Strategies that can be used to profit from an upward move in the price of a financial instrument. List of Bullish Strategies. A simple strategy, involving puts, which can be used when the expectation is that the underlying security will increase in price. Learn how to use a Bull Put Spread. An unconfirmed market movement which suggests a bull market, but is unconfirmed and ends up with the market moving downward. Learn how to use a Butterfly Spread. Buy to Close Order: An order that is placed when you want to close an existing short position through buying contracts that you have previously written.

Read more about the Buy to Close Order. Buy To Open Order: An order that is placed when you want to open a new position through buying contracts. Read more about the Buy to Open Order. This is a simple strategy that can be used to profit from an underlying security remaining neutral. Also known as a Time Call Spread. Learn how to use a Calendar Call Spread. Also known as a Time Put Spread.

Learn how to use a Calendar Put Spread. A type of spread that is created using multiple contracts with different expiration dates. Also referred to as a time spread. Read more about Calendar Spreads. Learn how to use a Calendar Straddle. Learn how to use a Calendar Strangle. The process that takes place when the writer of calls is required to fulfill their obligation and sell the underlying security at the agreed strike price.

A type of option which grants the holder the right, but not the obligation, to buy the relevant underlying security at an agreed strike price. Read more about Calls. An advanced strategy that can be used for profit in a volatile market, when there is a bullish outlook.

Learn how to use a Call Ratio Backspread. Learn how to use a Call Ratio Spread. The implied cost of using capital to purchase financial instruments based on interest incurred from borrowing that capital or interest lost from taking that capital from an interest bearing account. A type of option in which any profits due to the holder at the point of exercise or expiration are paid in cash rather than an underlying security being transacted.

Read more about Cash Settled Options. Tables that are used to show various information related to specific options. Read more about Chains. A type of option that allows the holder to choose whether it's a call or a put at some point during the term of the contract. The point at the end of a trading day when the market closes and final prices are calculated.

An order which is used to close an existing position. A type of order that combines multiple orders into one.