Targeting 1% ROI: Placing Rolling Orders to Avoid Cash-Secured Put Assignment

Introduction: The Weekend Planning Approach to Rolling Cash-Secured Puts

One of the most critical habits for successful wheel strategy execution is establishing a systematic daily routine for monitoring active positions and identifying opportunities to roll before assignment becomes unavoidable. This tutorial demonstrates the process of reviewing cash-secured put positions over the weekend, identifying which positions need attention based on extrinsic value thresholds, and placing rolling orders that will execute when the market opens the following Monday.

The demonstration focuses on a single Walgreens Boots Alliance (WBA) cash-secured put position trading at the $22.50 strike with five days remaining until the March 1st expiration. The position shows extremely low extrinsic value at just $0.06, well below the $0.10 threshold typically used as the signal to roll. However, rather than simply accepting this situation, the tutorial shows how to place a rolling order over the weekend targeting a 1.11% return on investment when the market opens.

This approach solves a common problem for option sellers: missing optimal roll timing because you're not monitoring positions during the final trading hours on Friday or because extrinsic value decays faster than anticipated. By placing rolling orders during non-market hours, you ensure positions roll at the next market open without requiring you to watch the screen constantly during trading hours.

The Daily Position Monitoring Routine Using ThinkOrSwim

The foundation of effective position management starts with establishing a systematic routine for reviewing all active positions. The demonstration shows logging into ThinkOrSwim and immediately navigating to the Monitor tab, where the Active Positions view displays every current position in the account along with customized columns showing critical metrics for roll decisions.

Setting Up the Extrinsic Value Column

The key to rapid position assessment is customizing the ThinkOrSwim position grid to display extrinsic value directly in the position list. Extrinsic value represents the time value remaining in each option contract - the portion of the premium beyond intrinsic value that decays as expiration approaches. When this number drops below specific thresholds, it signals elevated assignment risk.

The tutorial shows the Monitor tab configured with these essential columns:

• Symbol/Description: Shows the ticker and option details including strike and expiration
• Position Size: Number of contracts held (negative for short positions)
• Days to Expiration: Countdown to expiration date
• Current Price: Last traded price of the option
• Mark Value: Midpoint between bid and ask
• Extrinsic Value: The critical metric showing time value remaining

The $0.10 Extrinsic Value Threshold Rule

The demonstration emphasizes using $0.10 as the key decision threshold for when to consider rolling a cash-secured put position. This threshold represents the point where assignment risk becomes significant enough to warrant action. Here's why this specific number matters:

When extrinsic value remains above $0.15, the option buyer typically has little incentive to exercise early because they would forfeit that remaining time value. As extrinsic value drops below $0.10, particularly with less than a week to expiration, the cost of holding the option versus exercising it becomes minimal, increasing the likelihood someone will exercise and assign you the shares.

The tutorial shows examining multiple positions to find those approaching this threshold:

Why Walgreens Requires Immediate Attention

The Walgreens position stands out because its extrinsic value at $0.06 falls well below the threshold, even though five days remain until expiration. The tutorial notes this situation occurred because the extrinsic value likely dropped below $0.10 late in the trading day on Friday when the trader was not actively monitoring positions.

This illustrates a critical point: extrinsic value can decay rapidly during volatile trading periods or when the stock price moves significantly against your position. The $22.50 strike sits only $0.77 above the current stock price of $21.73, meaning the put is already in the money. With minimal extrinsic value remaining and the put trading in the money, assignment risk is elevated despite having five days remaining.

Creating the Rolling Order: Step-by-Step Process

After identifying Walgreens as the position requiring immediate attention, the demonstration shows the complete process for creating a rolling order in ThinkOrSwim. This workflow allows you to simultaneously close the current position and open a new position at a future expiration date, all within a single transaction that executes as a package when the market opens.

Accessing the Create Rolling Order Function

ThinkOrSwim provides a dedicated rolling order function that automates much of the complexity of executing a two-legged transaction. The tutorial demonstrates the following steps:

1. Select the position: Left-click on the Walgreens position row in the active positions grid to highlight it
2. Open the context menu: Right-click on the highlighted row to display available actions
3. Choose Create Rolling Order: Select "Create Rolling Order" from the dropdown menu
4. Review the option chain: ThinkOrSwim opens the option chain for WBA and automatically populates the rolling order with parameters to close the March 1st position and open a new position one week later

Understanding the Default Rolling Parameters

When you invoke the rolling order function, ThinkOrSwim makes several automatic assumptions about what you want to do. The demonstration shows the option chain displaying:

• Current expiration highlighted: March 1st expiration is shown as the position being closed
• New expiration pre-selected: ThinkOrSwim automatically jumps to March 8th, exactly one week later
• Strike price maintained: The $22.50 strike is preserved in the new position
• Credit displayed: Shows $0.25 as the net credit for this roll

Evaluating the Roll Economics

Before executing any roll, you need to assess whether the credit received justifies the extension of your capital commitment. The tutorial emphasizes always calculating the return on investment for each roll using the strike price as your capital base. For the Walgreens position, the initial one-week roll shows these numbers:

The demonstration notes that this roll produces slightly over 1% return, which meets the minimum threshold used for evaluating roll transactions. Some traders use 0.5% as their minimum, others require 1.5% or more - the specific threshold depends on your trading plan and market conditions. The tutorial consistently uses 1% as the benchmark, meaning any roll generating 1% ROI or better on the strike price qualifies as acceptable.

Why Rolling Orders Use Mid-Market Pricing Without Adjustment

An important nuance in the rolling order process involves how you handle bid-ask spreads when placing the order. The tutorial explicitly addresses why the demonstration does not adjust the default credit amount that ThinkOrSwim suggests, even though this differs from the approach typically used when placing standalone sell-to-open orders for new puts or calls.

The Difference Between Single-Leg and Rolling Orders

When selling a cash-secured put or covered call as a standalone transaction, the typical approach involves meeting in the middle between the bid and ask prices to improve the likelihood of execution while capturing better pricing than simply accepting the bid. However, rolling orders involve two simultaneous transactions that must execute as a package:

• Buy-to-close transaction: You're paying to close the existing March 1st put position
• Sell-to-open transaction: You're collecting premium for the new March 8th put position

The net credit displayed ($0.25 in this case) represents the difference between what you pay to close the old position and what you collect for opening the new position. This creates a complex optimization problem - adjusting the net credit higher to get more premium could prevent the buy-to-close leg from executing, while adjusting it lower might leave money on the table from the sell-to-open leg.

Allowing Flexibility for Market Conditions

The tutorial explains that accepting ThinkOrSwim's default net credit provides the platform with flexibility to adjust each leg of the transaction to ensure the overall package executes. This is particularly important when:

• Low extrinsic value: Your existing position at $0.06 extrinsic value may require paying more than the current bid to ensure someone fills your buy-to-close order
• Weekend gap risk: Prices could shift significantly between Friday close and Monday open when your order executes
• Liquidity concerns: Walgreens options may not have deep liquidity at all strikes, requiring price flexibility
• Priority on execution: Getting the roll completed matters more than extracting an extra $1-2 in credit

When to Adjust vs. Accept Default Pricing

The demonstration notes that the only time bid-ask adjustment typically makes sense is when opening standalone positions (new puts or calls) where you're executing a single transaction. In those cases, meeting in the middle helps you get better pricing while maintaining reasonable execution probability. For rolling orders, the added complexity of two legs makes acceptance of default pricing the preferred approach.

The tutorial specifically mentions being "very happy with 25 cents credit" and not needing "26 or 27 cents to feel better about this." This attitude reflects a practical reality: the incremental value of extracting slightly more credit does not justify the risk that your order fails to execute and you get assigned on the original position instead.

Placing the Order: Confirm and Send Process

After validating that the roll meets the 1% ROI threshold and accepting the default credit amount, the final step involves confirming the order details and submitting it to execute when the market opens. The demonstration shows clicking through the confirmation screen and reviewing all transaction details before final submission.

The Confirmation Screen Breakdown

ThinkOrSwim displays a detailed confirmation screen showing exactly what will happen when the order executes. The tutorial reviews each component of this confirmation:

Understanding the $23.68 Net Credit

The confirmation shows $23.68 as the total credit, which represents the $25.00 gross credit ($0.25 per share × 100 shares per contract) minus the $1.30 in commissions and $0.02 in fees. This is the actual cash amount that will be deposited into your account when the order executes, and this is the number you'll use when tracking the transaction in your cost basis system.

The demonstration emphasizes that this net credit figure is what matters for calculating your true ROI after costs. Using the net credit for calculations ensures you're accounting for the real profitability of the roll rather than overestimating returns by using the gross credit figure.

Submitting the Order for Monday Execution

After reviewing the confirmation screen, the tutorial shows clicking the "Send" button to submit the order. The order now sits in the queue as a pending order that will become active when the market opens Monday morning. If market conditions allow the order to execute at the specified net credit of $0.25 ($25.00 total), the trade will process automatically without requiring any additional action.

The tutorial notes several scenarios that could affect whether the order fills on Monday:

• Stock price rises significantly: If Walgreens gaps up above the $22.50 strike, both legs become less expensive and the roll should execute easily
• Stock price falls significantly: If Walgreens drops further, the buy-to-close leg may require paying more, potentially preventing the roll from achieving the $0.25 net credit
• Volatility changes: If implied volatility expands (earnings announcement, market sell-off), option premiums increase and the roll becomes more favorable
• Assignment over weekend: In rare cases, someone could exercise the option between Friday close and Monday open, though unlikely given the position is only slightly in the money

Monday Morning Follow-Up: Verifying Execution

The tutorial concludes by outlining what happens after submitting the rolling order and what actions you'll need to take on Monday once the market opens and your order either fills or fails to execute. This follow-up process is critical for maintaining accurate position tracking and making timely decisions if market conditions prevent the roll from completing.

Checking Order Status After Market Open

On Monday morning after the market opens, you'll need to log into ThinkOrSwim and check the status of your rolling order. Navigate to the Monitor tab and check the Orders section to see whether the order shows as filled, partially filled, or still working. The possible outcomes include:

1. Order filled: Both legs executed successfully at or better than your specified net credit, the March 1st position is closed, and the March 8th position is now active
2. Order working: The order is still active and attempting to execute, waiting for market conditions that allow both legs to complete at your target credit
3. Order cancelled: Market conditions moved against you significantly and the order could not execute at your specified terms
4. Position assigned: In rare cases, the original position was exercised over the weekend and no longer exists to roll

If the Roll Executes Successfully

When your rolling order fills, you'll need to enter the transaction into your cost basis tracking system to maintain accurate records. The demonstration mentions that tracking this roll will be covered in a follow-up video, but the general process involves:

• Navigate to the cost basis screen for Walgreens in MyATMM
• Enter the roll as a combined transaction or as separate close/open transactions depending on your preference
• Record the net credit of $23.68 (after commissions and fees)
• Update the position to reflect the new March 8th expiration and $22.50 strike
• Verify that your cumulative premium collected for Walgreens increases by the roll credit

If the Roll Does Not Execute

If market conditions change significantly and your rolling order does not fill on Monday, you'll need to make a decision about how to proceed. The tutorial mentions that the position "probably won't be exercised" even at $0.06 extrinsic value because there are still five days remaining and the strike is less than a dollar in the money. However, if the stock continues declining, assignment risk increases daily.

Your options if the roll fails to execute include:

• Adjust the order: Reduce your target credit (accept less than 1% ROI) to improve execution probability
• Wait for better conditions: Let the order work through Monday and Tuesday, hoping volatility or price movement creates the opportunity
• Accept assignment: Allow the put to be exercised, take ownership of 100 shares at $22.50, and immediately begin selling covered calls against the position
• Cancel and create new roll: Cancel the existing order and create a new rolling order pushing expiration further out (two weeks instead of one) to capture more credit

The Likelihood of Assignment Over the Weekend

The tutorial specifically addresses the question of whether the position might be assigned over the weekend before the rolling order has a chance to execute. Several factors suggest this is unlikely:

• Still out of the money by distance: The $22.50 strike sits $0.77 above the $21.73 stock price, meaning someone exercising would be paying more than current market value
• Time value exists: Even at $0.06, there's some extrinsic value that would be forfeited by exercising early
• Five days remaining: Most assignment activity occurs in the final 1-2 days before expiration, not with five days left
• No dividend event: Early assignment of puts most commonly occurs immediately before ex-dividend dates, which doesn't apply here

While early assignment is theoretically possible any time a put is in the money, the probability remains low enough that placing the rolling order over the weekend represents a reasonable risk. The tutorial's confident tone suggests this weekend planning approach succeeds in the vast majority of cases.

Strategic Framework: Building a Systematic Rolling Process

The tutorial demonstrates more than just a single rolling transaction - it illustrates a complete systematic approach to position management that can be applied across all your cash-secured put positions. This framework ensures you consistently identify positions at risk, evaluate roll economics using clear criteria, and execute rolls with appropriate pricing strategies.

The Weekly Position Review Checklist

Establish a recurring routine that runs through this checklist at least once per week, ideally over the weekend when you have time to review positions without the pressure of live market movements:

1. Log into ThinkOrSwim Monitor tab: Navigate to Active Positions view
2. Expand all position groups: Show the full details of every current position
3. Scan extrinsic value column: Identify any positions showing $0.15 or less in time value
4. Check days to expiration: Prioritize positions with both low extrinsic value AND less than 7 days remaining
5. Note strike vs. stock price: Determine whether each position is in the money, at the money, or out of the money
6. Create rolling orders: For any position below $0.10 extrinsic value, initiate the create rolling order workflow
7. Calculate ROI for each proposed roll: Verify the credit meets your minimum threshold (1% or your chosen target)
8. Submit orders for Monday execution: Place all qualifying rolling orders as limit orders

Position Triage Categories

Not every position requires immediate action. The demonstration shows evaluating multiple positions and categorizing them based on urgency:

Adapting the 1% ROI Threshold

While the tutorial consistently uses 1% as the minimum acceptable return on investment for rolling transactions, this threshold should be adapted based on several factors specific to your situation:

• Commission structure: If you pay higher commissions per contract, you may need a higher ROI threshold to cover these costs and maintain profitability
• Time commitment vs. passive income: If actively managing positions requires significant time, raising the threshold to 1.5% or 2% ensures adequate compensation for your effort
• Volatility environment: In high IV environments, target higher roll credits since they're readily available; in low IV markets, accept lower thresholds to keep positions active
• Account size considerations: Smaller accounts where each position represents significant capital might justify accepting 0.75% rolls to maintain activity, while larger accounts can be more selective
• Alternative opportunity cost: If you have abundant high-quality new positions available, raise your rolling threshold and let marginal positions expire or assign