Definition
Rollover (Futures)
Rollover is moving a futures position from the expiring contract to the next month to keep the trade alive.
As expiry nears, a trader who wants to maintain exposure closes the current-month future and opens the same position in the next month — this is a rollover. It is usually done in the final days of the expiry week on the NSE, with the bulk concentrated on expiry day itself.
The rollover percentage for Nifty, Bank Nifty, and stock futures is watched as a sentiment indicator: high rollover with rising open interest suggests strong conviction in the prevailing trend. The cost of rolling — the price difference between the two contracts — is the rollover cost.
Related terms
- Open InterestOpen interest is the total number of outstanding futures or options contracts that have not yet been closed.
- Rollover CostRollover cost is the price difference paid to shift a futures position from the near month to the far month.
- Calendar Spread (Futures)A futures calendar spread buys one expiry and sells another of the same underlying to trade the spread, not direction.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.