What is rollover?

Definition 

Rollover means carrying over an existing Futures & Options (F&O) position from the current month's expiry to the next month's expiry.

How It Works:

To perform a rollover, a trader will close their position in the expiring month and open a new position in the next month, while keeping the same position (long or short).

Why Traders Rollover:

Traders roll over their positions if they believe the current market trend is due to continue towards the next expiry.

Rollover Cost or Spread:

The price difference between the closing contract and opening is known as rollover cost or a rollover spread.

When Rollover Happens:

Rollover action is often observed later in the month towards expiration week, particularly for index and stock futures.

Significance of High Rollover Percentage:

Having a high rollover percentage demonstrates that traders who have current positions are in fact rolling (carrying forward) their positions forward and supports the notion that is has been sustained demand or continued interest in that trend.