What is rollover in futures trading?
Rollover in futures trading means shifting your open position from a contract nearing expiry to a later contract month. This allows traders to maintain market exposure without taking physical delivery or settling the position.
How rollover works
- Exit the current (expiring) contract position.
- Enter a new position in the same asset with a later expiry (next-month contract).
This keeps your position active in the market while avoiding settlement in the expiring contract.
Example of rollover
A trader holds 100 shares of ‘FutureTech’ in the September futures contract. As expiry approaches:
- The trader sells the September contract (exit).
- At the same time, buys the October contract for 100 shares of ‘FutureTech’ at the current October price.
This shifts the exposure forward by one month.
Key considerations
- Transaction costs: Includes brokerage, taxes, and any rollover-related fees.
- Price differential: The new contract may be priced higher (premium) or lower (discount) due to market dynamics.
What if...
| Scenario | Resolution |
|---|
| Contract prices differ significantly | Evaluate the carry cost and premium/discount before rolling over. |
| You forget to rollover before expiry | Your position may be settled or moved to delivery. Always rollover manually before expiry. |
Monitor the expiry calendar in FYERS and rollover at least one day before the contract expires to avoid last-minute risks.
Last updated: 01 Jul 2025
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