MM71 - Advanced Rolling

Hi everyone. Today I want to talk about a more advanced concept that is part of using the DOM for rolling. This is not financial advice. I am not a CPA and I am not a certified trading advisor. Let's get into it.

I get a lot of questions from people placing good til cancelled orders in the DOM, trying to roll their long put lower to help fund rolling their long call lower, the moves inside a modified synthetic long. And everyone tells me the same thing: I want to do it, but I am only doing it for 6 dollars. I have nothing against that. But it is my job to teach you to plan ahead. What move is actually going to be necessary for that order to fill? And are you okay potentially missing the trade entirely because you were holding out for the extra 20 or 30 cents that you will most likely never get?

I am going to slow down here, because I do not want you to miss this. Let's set the picture. Pretend I have a 330/280 put spread, the short put spread that lives inside my modified synthetic long. We have bounced up to 340. Before I touch anything, I ask myself one question: where do I think the low is that we might see again on Tesla? Let's say I believe 300 will hold as support. If it does, that is the bottom, and it is roughly a 40 dollar drop from here.

So here is the real question. If I am holding that put spread and I know I want to roll my 280 put down to 270, what are the actual odds of getting filled at 6 dollars? There is a quick cheat sheet for answering that, no fancy analysis required, and once you see it you will never place these orders blindly again.