What is the cost of rolling over a position?
Rolling over a futures position involves closing the current contract and opening a new one, and this action comes with specific costs that traders should account for.
Components of rollover cost
- Price differential: The difference in pricing between the near-month contract and the next-month (or far-month) contract. This can be a premium or a discount depending on market conditions.
- Brokerage charges: Fees applied for both the sell (exit) and buy (entry) orders.
- Transaction charges: Includes exchange fees, statutory levies, and taxes for each leg of the rollover.
Example
If you sell the September contract at ₹500 and buy the October contract at ₹510:
- Price difference: ₹10 per share (cost or carry)
- Total rollover cost: ₹10 × quantity + brokerage + taxes
What if...
| Scenario | Resolution |
|---|
| Next-month contract trades at a premium | Consider if the potential gain justifies the additional cost before rolling over. |
| Rollover cost reduces expected returns | Reassess your trading strategy or timing to maximise cost-efficiency. |
Last updated: 26 Jun 2025
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