The 10C Roll, Filed at the Deadline: Two Fills, Three Lessons
September 18, 2:51 pm ET. Nine hours left before the close. Nine hours left before my five 10C SEP18 contracts would have turned into an accidental short of 500 NOK shares.
One combo order, two fills at the same instant:
- Bought back 10C SEP18 ×5 @ $0.66 (paid $330)
- Sold 12C OCT23 ×5 @ $0.44 (collected $220)
Old leg closed, new leg open. That’s what a roll is.
The Ledger: What This 10C Leg Really Cost
📒 Ledger detail (click to expand)
The 10C SEP18 was sold in early September at $0.198, collecting $99. Tonight it was bought back at $0.66, paying $330.
Realized loss on this leg: -$231.
The new 12C OCT23 brought in $220 of premium. Net of the two: roughly -$11 — a wash.
Compare with the alternative: buy back and walk away, and -$231 lands for good, with zero coming back. The roll converted a certain -$231 into “probably -$11, possibly worse” — as long as NOK stays below $12 through October 23, this cycle closes at -$11.
That’s the seller’s exchange: use a new obligation to subsidize an old wound.
Lesson One: A Qualifying Roll Must Cover the Buyback with New Premium
In the post-mortem, one question had to be asked: was this roll qualified?
The standard should be: new premium ≥ buyback cost. Covering the loss is the floor; collecting more than the buyback — making money on the roll — is what makes it good.
By that standard: paid $0.66 to close, collected $0.44 on the new leg — $11 short of covering. This roll was only “nearly qualified.”
The fully qualified candidate was sitting right there on the chain: NOV20 12C at $0.63, which would have covered the $0.66 buyback. I had ranked “shorter lock-up” above “loss coverage” and demoted it to a backup.
Wrong order. The first question of any roll is “can the loss be recovered?” The second is “how long must the obligation run?” Cover first, profit second; coverage before tenure.
Lesson Two: The New Expiry Must Avoid the Earnings Calendar — We Almost Missed This
More worth recording than the $11 is the calendar problem.
I chose the 12C OCT23. Expiry: October 23. NOK’s earnings: October 22.
The new short leg expires one day after earnings — it is itself an earnings-spanning short call.
Before rolling I checked the option chain and never checked the earnings calendar. What does an earnings-spanning 12C mean? If NOK gaps on earnings morning, a $12 buffer can evaporate in the first tick. Sellers don’t fear slow declines — they fear gaps.
So the management line is clear:
- Before October 15: let the 12C burn theta. Do nothing.
- If NOK approaches $12, or when the October 15 earnings blackout window arrives: roll earlier, to a date further past earnings — first choice 13C DEC18 (strike up to 13, +22% buffer from spot, and net credit positive under the new rule), second choice 13C NOV20 (near-free upgrade to the 13 strike).
Rolling early beats rolling the night before earnings — cheaper, and a lot calmer.
Lesson Three: Two Checklists Before Every Roll
Tonight compresses into two iron rules, in this order:
- Money: is the new premium ≥ the buyback cost? If not, keep searching further out in expiry and higher in strike; if nothing on the whole chain qualifies, a plain buyback is the only option — no fake rolls.
- Calendar: does the new expiry fall inside an earnings or event window? For any event-spanning leg, either move the expiry further out, or move the strike up to where even a gap can’t reach it.
Order first, calendar never.
The Full NOK Short-Leg Map (after the Sep 18 close)
| Leg | Qty | Expiry | Status |
|---|---|---|---|
| 10.5P | ×4 | SEP25 | $0.07 from the strike, assignment risk 🔴, decide by Sep 23 |
| 11C | ×10 | OCT2 | Δ0.41, roll up before Oct 2 |
| 12C (new) | ×5 | OCT23 | earnings-spanning, pre-roll by Oct 15 |
| 10P | ×2 | OCT2 | holding for theta, take-profit at 60-70% |
| LEAPS 10C | +15 | JUN’27 | the covered base for all short calls |
Fifteen short calls, exactly covered by fifteen LEAPS — the short-call side is at full capacity; no new NOK seller legs until one of these batches clears.
A roll is never skipping class — it’s moving the homework from tonight to next week. But only if you actually flip next week’s calendar first.