Today I want to introduce a concept we've never discussed before: rolling forward in time. This is different from rolling down to a lower strike — this is about buying yourself more time on a trade when the narrative is still intact but you're running low on the clock.
Let me set the stage. Say I bought the June 2028 $30 call on IBIT and paid $18 for it. Six months have gone by, the stock hasn't really moved, and I'm sitting there thinking: I really wish I had more time.
Sound familiar? If so, this strategy is for you. But there's a catch — you can't just roll blindly. The math has to make sense, and tax implications can make or break whether this is worth doing.
Here's how I think through it:
Step 1: Check your tax situation. This is the first filter. Let's say I paid $18 and the option is now trading at $18.50. If I sell it, I barely owe any taxes on that small gain. Great — this is when rolling makes sense.
But what if the option is now trading at $30? That's a $12 gain, and I'm going to owe taxes on it. In that scenario, it's no longer cost-effective to roll. The tax hit wipes out the benefit.
The rule: Roll when you don't have a meaningful tax burden. If your trade is in a retirement account? You don't have to worry about the tax part at all.
Step 2: Price out the calendar. When you sell an option in one time period and buy the same strike in a later time period, it's called buying a calendar. So I'd sell my June 2028 $30 call and look at buying the December 2028 $30 call. Same strike, further out in time.
In this case, the debit to roll is about $1.33.
Step 3: Calculate the cost as a percentage. I take $1.33 divided by the price of the underlying ($38.60) and get 3.4%. For six extra months of time, I'm comfortable with that. If the roll cost me $3, that would be 7.7% — and I'm not interested. It's got to make financial sense.
Step 4: Always use a limit order. This is critical. When you're rolling forward in time, you're generally rolling into an option with lower open interest. Market makers will take advantage of that if you use a market order. I'm always making this a limit order. I might see the midpoint at $1.33, stretch to $1.40 to get filled, but I'm never paying $2.15. Patience.
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When do I consider this? When I have a LEAP — say a January 2028 — and I can roll it to December 2028, picking up 11 extra months. The trade hasn't worked yet, but I still believe in the long-term narrative. The position is either in a retirement account (no tax concern) or it hasn't appreciated much (minimal tax impact).
This is the time in the market cycle when I start making these adjustments. It's about giving your best ideas the time they need to play out — without overpaying for that time.