What Is ‘Rollover’ In the Stock Market?

Rollover means carrying forward a contract position to another expiry date. Know the details here.

If the trader feels that there is too much loss to be incurred on a contract and does not want to exercise it, he can choose to rollover.

When it comes to the futures market the price movements can be quite volatile and unpredictable. If the prices are moving up rapidly one day, there are chances that they might go down the very next day.

A futures contract is all about predicting the future price movements of the stocks. Since the market is so volatile, many a times the prices might not move in the expected direction. In such a scenario, traders participate in a 'rollover' to avert potential loss.

Rollover, in layman's language, is carrying forward. Any futures contract in the Indian stock market expires on the last Thursday of every month. These contracts usually get squared off or exercised on the last day at the price prevailing in the market. However, if the trader feels that there is too much loss to be incurred and does not want to exercise the contract, he can choose to rollover. This mean she can opt to carry forward the positions or enter into a similar contract expiring at a future date.


Let us understand the concept better with the help of an example. Say a trader holds 10 long futures contracts of ABC company expiring on the last Thursday of October. If he decides to rollover, he will square off his position and buy 10 futures contracts of the same company; however, the new contract will expire in November.

When can a trader rollover?

While many traders opt to rollover on the day of expiry, it is not mandatory. Rollovers usually start a week before the expiry date, and can be done until last minute of the market hours on the expiry day.


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