In actuality, he is referring to a rollover into new spreads.Ī trading method known as a "spread roll over into new spreads" is closing out an active options spread position before starting a new spread position with a later expiration date.Ī spread in options trading is a method of reducing risk and maybe making money by purchasing and selling options contracts with various strike prices and expiration dates.īy moving the position's expiration date ahead to a later date, a trader effectively extends the life of their position when they execute a spread roll over.Ĭonsider a trader who currently holds an options spread position with a March 1st expiration date. In order to "prolong an options deal so you can earn money even when the stock market does the unexpected," according to Jim, he has a "secret." Jim's Secret To "Extending" Option Trades Overall, credit and debit options are two different types of options trading strategies that involve different levels of risk and profit potential.īoth strategies can be used in a variety of market conditions, and traders will choose the strategy that best suits their investment goals and risk tolerance. In a debit option strategy, the trader has unlimited profit potential but is also exposed to potentially significant losses. On the other hand, a debit option is when the trader buys an option contract with the aim of profiting from a price movement in the underlying security.Ī debit option strategy involves paying a premium to purchase the option, and the trader will only profit if the price of the underlying security moves significantly in the desired direction. In a credit option strategy, the trader is assuming limited risk for limited profit potential. Credit and debit options are two types of options trading strategies that involve buying and selling options contracts.Ī credit option involves a trader selling an option contract with the aim of collecting a premium, which is the price paid by the buyer of the option.Ī credit option is profitable if the price of the underlying security remains above a certain level (in the case of a call option) or below a certain level (in the case of a put option) at the time of expiration.
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