Rolling Cost

Rolling cost refers to the expense incurred when a trader extends their exposure by closing an expiring options contract and simultaneously opening a new one with a later expiration date. This process, often called rolling, allows traders to maintain a specific market view without taking delivery of the underlying asset.

The cost is driven by the difference in premiums between the two contracts, which is influenced by time decay and implied volatility. In crypto markets, this cost can be highly variable due to rapid shifts in market sentiment.

It is a fundamental consideration for portfolio managers who need to maintain long-term hedging strategies. Minimizing rolling costs is key to optimizing the performance of systematic derivative strategies.