This is a rolling action in which the strike price of the new option position is higher than that of the closed position. For example, the options writer rolls up when they buy back the original option sold and then write another option at a higher strike price.
Rolling a long call up: cash released and upside changed
Buy a $50 call for $4, then sell it for $7 and buy a same-expiry $55 call for $3. The old call realizes +$300. The roll releases $400 cash, but the replacement has cost $300. Total net premium across the sequence is zero: −$400 + $700 − $300.
| Stock at expiry | Replacement P/L | Combined P/L | Original call if held |
|---|---|---|---|
| $52 | −$300 | $0 | −$200 |
| $58 | $0 | +$300 | +$400 |
| $65 | +$700 | +$1,000 | +$1,100 |
Rolling up reduced the replacement premium at risk but also raised its strike. The unchanged-expiry comparison isolates that choice. If expiry changes too, the exposure includes a new time horizon and the table no longer captures the full difference.
For a short call, rolling up means closing the old short and opening a higher-strike short. That can require a debit and alter assignment proceeds. The direction “up” says nothing by itself about whether risk rises, whether cash is received or whether the combined trade has recovered a loss.
