Kevin Hincks

Expiration is approaching, and an option trader has an options position—let’s say a covered call or long-dated calendar spread. So, the trader has a decision to make. Should the trader close the trade or roll it? Here’s a simple way to test criteria that could help traders decide. First, traders should check to see if any of their original assumptions have changed. If this is a covered call, are they still bullish on the underlying?

I played rugby in college and sporadically until age 50. There’s an old saying I often use when explaining the sport to a skeptical newcomer. I like to think that it applies to options trading as well. “Rugby usually looks more violent from the sidelines than from inside the pitch.” Options trading (like rugby) isn’t for everyone. And to the untrained eye, rugby can seem complex, disorganized, and intimidating – much like options trading.

(NOTE TO READERS: JJ Kinahan is traveling on business today and tomorrow, so the following is a guest Market Update column written by Kevin Hincks, of the Trader Education division of TD Ameritrade and Swim Lessons host. Swim Lessons is trader educational programming, which can be accessed live beginning at 10:30 a.m. CT each trading day from the Support/Chat function within the TD Ameritrade thinkorswim® platform).