If you’re familiar with the covered call options strategy, you know it’s a beginner-friendly way to generate consistent income.
But what happens when the market moves unexpectedly, and your covered call is no longer a perfect fit?
That’s where rolling comes in.
In his latest video, Gavin McMaster breaks down exactly what it means to roll a covered call, why traders do it, and how to manage your positions like a pro — using real examples from Salesforce (CRM), NVIDIA (NVDA), and Apple (AAPL).
Rolling simply means closing your existing covered call and opening a new one — either with a different strike price, a new expiration date, or both.
You can think of it as adjusting your trade to fit new market conditions. It’s not about “starting over”; it’s about keeping your position working for you.
There are four main reasons traders roll:
To collect more premium: If your covered call has lost most of its value (say, 80%), you can buy it back cheaply and sell a new one closer to the current price for extra income.
To avoid assignment: If the stock has moved up and your short call is in the money, rolling can prevent your shares from being called away.
To regain upside: If you’re bullish and want to capture more price appreciation, you can roll to a higher strike.
For tax reasons: Rolling can delay a taxable sale of shares that would otherwise trigger capital gains.
Let’s say you sold a $265 call on Salesforce (CRM), and the stock dropped. That call might now be worth only $0.90.
You could buy it back and sell a new call at a lower strike of $250 for $2.67, netting about $1.75 in additional premium.
That boosts your annualized return from 8.2% to 24.5%, but it also reduces your upside. If CRM rebounds, you might have to sell your shares at $250 instead of $265.
So rolling down increases income, but sacrifices some potential gains.
Now flip it. Let’s say NVIDIA (NVDA) rallied through your covered call strike at $190.
You could buy back your in-the-money call and sell a new one at a higher strike; say $195. You’re paying to get more upside potential — essentially “buying back” part of your gains.
