4 Reasons to Roll Your Covered Call Option and Keep Your Income Strategy Alive

Core Insights - The article discusses the strategy of rolling covered calls, which allows traders to adjust their positions in response to market changes [3][4]. Group 1: Definition and Purpose of Rolling - Rolling a covered call involves closing an existing position and opening a new one with a different strike price or expiration date, adapting to new market conditions [3]. - The primary reasons for rolling include collecting more premium, avoiding assignment, regaining upside potential, and tax considerations [4][8]. Group 2: Examples of Rolling Strategies - In the case of Salesforce (CRM), rolling down from a $265 call to a $250 call can increase annualized returns from 8.2% to 24.5%, while sacrificing some potential gains [5][6]. - For NVIDIA (NVDA), rolling up from a $190 call to a $195 call allows traders to capture more upside potential by paying to regain part of their gains [7].