In the context of options trading, rollback refers to the situation where a trader might sell one option, but for the same strike price, they would buy another option with a closer expiration date. Now, in the general sense of the word, rollback describes reverting back to former policies or procedures, wages or agreements.
For example…
Cara owns shares in a publishing group who among other things, have newspapers, magazines and digital publications in their portfolio. She has some shares due to mature in December but decides to swap the same shares to mature in October once she hears news that a new publication will be added to the publisher’s portfolio. By executing this rollback, Cara is hoping to gain more return on investment from her shares.
