$Alibaba(BABA.US)

The thinking behind rolling an option is that we don't need to capture all the remaining value of the option; we only need to capture the period when the option's theta decay is fastest. The example above uses a put option with the same 130 strike price, and my position is to sell. When there are only 30 days left to expiration, the option is only worth 0.3-0.4, so I decisively roll to a later expiration. At this point, you'll notice the position remains unchanged, but the premium income over the same period increases.