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OptionsMath

Option Roll Calculator

Option roll profit or loss equals original credit plus new premium minus closing cost minus new short option payoff, times 100 shares times contracts.

Expiration scenarios

Solution

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Option Roll Formula

This calculator models rolling a short call or short put into a new short option.

Worked Examples

Load these examples to compare common option roll payoff outcomes.

ROLL FOR CREDIT

How does a credit roll change break-even?

A short put is rolled by paying $4 to close and collecting $6 on the new put.

  • Roll credit is $2.
  • Original credit was $2.
  • Adjusted total credit is $4.
  • A $95 put breaks even at $91.

Result: the roll improves the total credit to $400 on 1 contract.

The new option still has assignment risk.

How It Works

Rolling a short option means buying back the current short option and selling a new one, often at a different strike or expiration. This calculator tracks the combined credit or debit.

Example Problem

An original short put collected $2, costs $4 to close, and the replacement put sells for $6.

  1. Subtract close cost from new premium to find roll credit or debit.
  2. Add the roll amount to original premium.
  3. Calculate new short option intrinsic at expiration.
  4. Subtract intrinsic from adjusted total credit.

The calculator models the new option at expiration, not the mark-to-market path before then.

Key Concepts

A roll can improve or worsen break-even depending on whether it adds credit or requires a debit.

Applications

  • Checking whether a roll adds enough credit.
  • Estimating adjusted break-even.
  • Comparing put vs. call roll outcomes.

Common Mistakes

  • Ignoring the cost to close.
  • Resetting break-even to only the new strike.
  • Forgetting short call upside risk.

Frequently Asked Questions

What does the Option Roll Calculator calculate?

It calculates expiration profit or loss, break-even levels, maximum profit or loss where they are defined, and payoff chart data from manually entered prices and premiums.

Does this calculator need live option quotes?

No. Enter the stock price, strikes, premiums, and contracts yourself. The calculator models expiration payoff from those inputs.

Does this model early assignment or changing implied volatility?

No. It is an expiration payoff calculator. It does not model commissions, fees, early assignment, exercise decisions, taxes, or mark-to-market pricing before expiration.

Why can payoff before expiration differ from this result?

Before expiration, option prices still include time value and implied volatility. This calculator focuses on intrinsic value at expiration.

Reference: Options Industry Council strategy education and standard expiration payoff definitions.

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