In futures trading, contract rollover refers to the process of shifting your position from a near-month futures contract (about to expire) to a next-month contract of the same underlying asset.
This allows you to maintain your exposure or hedge without interruption.
Rollover is common among traders and investors who want to stay invested or hedged beyond the current expiry date.
How Rollover Works
Close the existing position in the current month’s contract
Open a new position in the next-month (or further) contract of the same asset
This happens on or before expiry day (usually the last Thursday of the month in India)
Example
You’re holding a long position in Nifty Futures – March contract.
As expiry approaches:
Sell (exit) March Futures
Buy Nifty Futures – April contract
This process = Rollover
Now your position is moved into the next series without losing exposure.
Why Is Rollover Important?
Avoids sudden square-off at expiry
Maintains trend position or hedge beyond one month
Helps traders carry positions forward without break
Rollover activity also shows market sentiment for the next series
Rollover Activity: A Market Signal
Market analysts and institutions track rollover percentages to gauge sentiment:
Rollover %
Interpretation
High
Traders confident in trend; continuing position
Low
Uncertainty or shift in sentiment
Premium
Buying next-month at higher price = bullish
Discount
Buying next-month at lower price = bearish
Key Terms
Near-month contract: The one that expires soon (e.g., March)
Next-month contract: The one that follows (e.g., April)
Far-month contract: Longer-dated contract (e.g., May or June)
Key Takeaways
Rollover = moving a futures position from one expiry to another
Ensures continuous trading view beyond a single month
Must be executed manually by closing the old contract and opening a new one
Rollover trends provide insight into trader expectations and positioning