Roll

A roll is the act of closing a position you already hold and simultaneously opening a similar one that expires later, or has a different strike price, or both. It's most commonly discussed with options, but traders also "roll" futures contracts as they approach expiration.

Here's how it works mechanically: say you own an option that expires this Friday and you want to keep the trade going without actually taking assignment or letting it expire worthless. You buy back (or sell, if you're closing a short position) the option you have, and at the same moment you open a new option position on the same underlying stock, but with a later expiration date. If you also change the strike price — the price at which the option can be exercised — while doing this, you're rolling "up," "down," "out," or some combination, depending on direction.

The nuance that trips people up is that a roll is really two separate trades bundled into one order for convenience — a closing trade and an opening trade — and each leg has its own price. Brokers often let you enter a roll as a single "combo" order so you get one net price (a debit, meaning you pay, or a credit, meaning you collect money) instead of executing two trades and hoping the prices don't move against you in between. People also confuse rolling with simply holding a position longer; rolling actually closes out the original contract entirely and replaces it with a legally distinct new one, so gains or losses on the first leg are realized at that moment.

For futures traders, rolling means closing your contract that's nearing its expiration or delivery date and opening the same position in the next active contract month, so you keep your market exposure without having to deal with physical delivery or final settlement.