How can I rollover a contract to avoid physical settlement?
Rollover refers to the process of transferring your position from a near-month expiry contract to a subsequent month's expiry contract, typically done on the expiry day. This allows you to avoid physical settlement and maintain your position for the next month without taking delivery of the underlying asset.
How Rollover Works
In rollover, you are essentially closing your current position and opening a new one in the next expiry month.
Example:
- Mr. Z holds a position in the TCS Futures contract for May, which is nearing its expiry.
- If Mr. Z wants to continue holding his position for June but wants to avoid physical delivery, he would square off his May contract and initiate an identical position for June.
- This action constitutes a rollover.
Always be vigilant about contract expiry dates to ensure that you roll over your position well in advance. This helps you avoid the risk of physical delivery.
What if...
| Scenario | Outcome |
|---|
| You fail to rollover your contract | The position will settle physically, and you may face delivery obligations |
| You rollover your contract on expiry day | The position is squared off and reinitiated for the next expiry month without physical settlement |
| You miss the rollover deadline | You may be forced into physical settlement if the contract expires |
Last updated: 27 Jun 2025
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