Roll Up

A roll up is an adjustment to an existing options position where you close the option you currently hold and simultaneously open a new option of the same type (call or put) and same expiration style, but at a higher strike price. The word "roll" refers to the act of shifting a position rather than simply exiting it; "up" refers to the direction of the strike change.

In practice this is done as a single combined order, often called a spread order, so both legs execute together at a net price rather than as two separate trades exposed to price movement in between. For example, someone holding a call might roll up if the underlying stock has rallied and the original strike is now deep in-the-money, sold at a profit, with the proceeds partly used to buy a higher-strike call that costs less and has more room to gain if the stock keeps rising.

The nuance that trips people up is that "up" describes the strike, not necessarily the outcome. Rolling up a call is usually a bullish continuation move, locking in some gains while staying in the trade. But rolling up a put (moving to a higher strike put) is a different animal — it typically reduces bearish exposure or locks in profit on a put that has become deeply in-the-money as the stock fell, since a higher strike put on the same underlying is generally cheaper... actually the mechanics depend on which side of the trade you are adjusting, so the effect on directional exposure and on the credit or debit received should be worked out strike by strike rather than assumed from the label alone.

People also confuse "roll up" with "roll out," which changes the expiration date instead of, or in addition to, the strike. A move that changes both strike and expiration at once is sometimes called a "roll up and out."