A trade going against you isn’t always a trade to close. Adjusting — changing a position’s structure mid-flight — lets you reduce risk, buy time, or improve a thesis. Used well it’s powerful; used to avoid taking a loss, it’s dangerous.
Rolling
The most common adjustment. You close one option and open a similar one at a different strike or expiry:
- Roll out (later expiry) — buys more time, usually for a credit. The default move on a tested short option.
- Roll up / down (new strike) — shifts your risk to follow the underlying.
- Roll out and up/down — combine both to reposition and collect credit.
The golden rule: roll for a credit where possible. Rolling for a debit is just adding money to a losing trade.
Defending a tested side
In a two-sided trade (like an iron condor), when one side is threatened:
- Roll the untested side closer to collect more credit and widen your breakeven.
- Roll the whole structure out in time.
- Convert to a different structure (e.g. turn a condor into an iron fly) to recentre on the new price.
Knowing when not to adjust
This is the hard part. Adjusting can quietly turn a small defined loss into a much bigger one. Ask:
- Is my original thesis still valid, or am I just avoiding a loss?
- Am I adding risk to a position that should be closed?
- Would I open this adjusted trade fresh today? If not, don’t roll into it.
The discipline
Plan adjustments before you enter — know your defend point and your give-up point. The market doesn’t care about your entry price; a good adjustment improves the trade from here, not from where you started. Sometimes the best adjustment is simply taking the loss and moving on.