Roll Down

Roll Down
The replacement of an option with a new option that has a lower strike price. The use of a roll down means that the investor does not have to exercise the option. Instead, the investor extends the time period over until the investment expires.

A roll down strategy can help an investor mitigate losses when the underlying asset is declining in value. For example, an investor who has purchased a securities option to purchase 100 shares believes that the value of shares is going to decline. The investor sells a call with a higher strike price and earns a premium. The stock does decline in value and the call is now worth less. The investor cancels the call and makes a profit. Then the investor sells another call with a new strike price and receives a premium on that option as well.

Investment dictionary. . 2012.

Look at other dictionaries:

  • roll down — phrasal verb [transitive] Word forms roll down : present tense I/you/we/they roll down he/she/it rolls down present participle rolling down past tense rolled down past participle rolled down 1) if you roll a car window down, you turn a handle or… …   English dictionary

  • roll down — phr verb Roll down is used with these nouns as the subject: ↑drop, ↑tear Roll down is used with these nouns as the object: ↑leg, ↑sleeve, ↑slope, ↑window …   Collocations dictionary

  • roll down — verb gather into a huge mass and roll down a mountain, of snow • Syn: ↑avalanche • Derivationally related forms: ↑avalanche (for: ↑avalanche) • Hypernyms: ↑descend, ↑fall …   Useful english dictionary

  • roll down — To move to an option position with a lower exercise price. Bloomberg Financial Dictionary …   Financial and business terms

  • roll-down — …   Useful english dictionary

  • Roll-Down Return — A form of return that arises when the value of a bond converges to par as maturity is approached. The size of the roll down return varies greatly between long and short dated bonds. Roll down is smaller for long dated bonds that are trading away… …   Investment dictionary

  • Laid So Low (Tears Roll Down) — Infobox Single Name = Laid So Low (Tears Roll Down) Artist = Tears for Fears from Album = Tears Roll Down (Greatest Hits 82 92) A side = B side = The Body Wah , Lord of Karma Released = February 10 1992 Format = 7 , 12 , CD Recorded = 1991 Genre …   Wikipedia

  • Tears roll down (greatest hits 82-92) — Tears Roll Down / Greatest Hits 1982 1992 est le premier Best of officiel des Tears For Fears. D abord édité en 1992 sous la forme d une compilation (le CD 1 ) regroupant les plus grands succès de TFF c est à dire ceux qui ont connu les honneurs… …   Wikipédia en Français

  • Tears Roll Down (Greatest Hits 82–92) — Infobox Album | Name = Tears Roll Down (Greatest Hits 82 92) Type = Greatest hits Artist = Tears for Fears | > Released = 1992 Recorded = Genre = Length = 59:15 Label = PolyGram Producer = Reviews = * Allmusic rating|4|5… …   Wikipedia

  • Tears Roll Down (Greatest Hits 82-92) — Tears Roll Down (Greatest Hits 1982 1992) Album par Tears for Fears Sortie 1992 Enregistrement 1982 à 1991 (première édition) Durée 60:00 (première édition) Genre R …   Wikipédia en Français

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