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:

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  • 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

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  • 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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