Members of Trading the Post have been trading around a long-term position in $INTC over the past month. Since traders started their long-term position in $INTC, the stock has rallied over 8%. In a recent weekly webinar, a member asked Ronchero when was the appropriate time to roll up the LEAPS (Long-term Equity Anticipation Security) contracts.
There are three different ways to roll:
- Delta – Trading the Post establishes LEAPS positions with ~80 delta contracts. When the contracts get to a 90 delta, look to roll to the next 80 delta.
- Underlying Price – For a slower-moving name, like $INTC, look to roll for every $5 the underlying stock moves to continue capturing profits.
- Technical Levels – Some traders can roll based on where technical indicators are on the chart, relative to the underlying. The 50 SMA, 200 SMA, and Fibonacci Retracement levels are technical indicators to use when considering rolling.
Every trader manages their trades differently and determines the appropriate levels to adjust their positions.
Disclaimer: Rolling is part art and part science...