Rolling Calls and Adjusting a Modified Synthetic Long
The market gave us a lot to work with today, and I want to walk you through exactly what I did — and more importantly, why I did it.
What the Charts Are Telling Us
Let's start with the big picture. On the four-hour chart for QQQ, we still have an intact trading range, but something critical has shifted: we are now trading below the 200 moving average. That was a key support level, and losing it changes the conversation.
Our last line of defense? The major support line I've drawn in at $580. That's the level I'm watching closely.
But here's where it gets interesting — and why I didn't panic. We hit -2 mean reversion, and I'm seeing buy divergence forming. What does that look like? The price made a lower low, but mean reversion made a higher low. That's a signal I pay attention to. It doesn't guarantee a bottom, but it tells me things are starting to line up.
Tesla Broke Support — Here's What I Did
You all know I own a lot of Tesla. I'm long-term bullish. But the chart broke support today — $380 did not hold, and we closed below the 200 moving average. We're now testing old resistance (new support) around the $360 area.
And once again -2 mean reversion plus buy divergence. Multiple signals stacking up.
So I made a decision: it's time to start rolling some options.
The 30% Rule for Rolling Calls
Here's the framework. Let's say you own a 430 call. The question is: Can I roll it down, and does it meet my rule criteria?
My rule is simple:
I do not want to pay more than 30 cents on the dollar to roll a call.
If the spread is $10 wide, I'm not paying more than $3. When I checked this earlier today, the cost was actually below $3 — which tells me the criteria are met and it's time to move.
But rolling a call is only step one. What I did next with my Modified Synthetic Long positions is where the real portfolio management happens — and it's the difference between hoping the market cooperates and being prepared no matter what it does.
Want to see exactly how I adjusted my MSL hedges, the credit rules I used, and how I apply this across my entire portfolio?