What Is “Slippage” in the Context of Rolling a Crypto Options Hedge?

Slippage is the difference between the expected price of an option trade and the price at which the trade is actually executed. When rolling a hedge, a trader sells the old option and buys a new one.

Slippage occurs if the market moves between the two trades or if the bid-ask spread is wide, forcing the trader to sell lower and buy higher than anticipated. This is particularly prevalent in less liquid crypto options markets.