High yield firms nowadays almost exclusively issue bonds that are callable. We construct a new measure of option  moneyness and show that firms aggressively exercise the interest rate and spread option implicit in these contracts. Controlling for moneyness, firms frequently prepay bonds and issue new debt if rollover risk is high. We develop and estimate a structural model to quantify the costs and benefits of dynamically managing this risk. The ability to use callable debt almost entirely dissipates dead-weight losses from rollover risk. Creditor-shareholder conflicts reduce the effectiveness of this dynamic hedging strategy for highly levered firms.