Short Strangle Adjustments: Rolling Up the Short Put Options

✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: https://geni.us/options-trading-pdf

Download the Rolling Research Infographic: https://www.projectoption.com/blog/sh... | When trading short strangle option positions, you may need to make an adjustment as the stock price changes in one direction. In this video, we'll discuss the short strangle adjustment of rolling up the short put option.

When selling strangles, your directional exposure will typically begin close to zero, as short strangles are usually structured as market-neutral trades. However, if the stock price starts to trend in one direction, you may need to make an adjustment to neutralize your directional risk.

In this video, we'll cover how to "roll up" the short put option of the short strangle, which is one of the short strangle adjustments available to you when the stock price increases.

You'll learn how rolling up the short put option benefits you in terms of maximum profitability and directional risk, as well as some of the downsides involved with the short strangle adjustment of rolling up the short put.

By rolling up the short put options of a short strangle position, you will increase the option premium that you receive, which will "push" your upper breakeven point further above the stock price.

Additionally, you will neutralize your position delta, which means you'll lose less money if the stock price continues to rise. However, that also means you'll make less money (or potentially lose money) if the stock price starts to fall after you roll down the call option.

Lastly, you'll also have a lower probability of profit because rolling up the short puts narrows your range of profitability. tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Project Finance(Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade.