ROLL OVER OF FUTURE OF CONTRACTS is like we carry forward in accounts
The market the price movements can be quite volatile and erratic. If the prices are moving up rapidly one day, there are chances that they might go down the next day.
A 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.
Any 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 they can opt to carry forward the positions or enter into a similar contract expiring at a future date.
Say a trader holds 100 long contracts of XYZ Company expiring on the last Thursday of October. If he decides to rollover, he will square off his position and buy 100 contracts of the same company. However, the new contract will expire in November.
Rollovers usually start a week before the expiry date, and can be done until last minute of the market hours on the expiry day, While many traders opt to rollover on the day of expiry, it is not mandatory.
These are the rollover in Nifty future for the next month
look at the last two rows end.
Date Open High Low Close Settle Price Contracts Turnover (in lacs) OI changes
10-Feb-17 8850.0 8868.5 8818.0 8840.0 8840.0 3572.0 23693.2 1599450
13-Feb-17 8842.0 8869.0 8797.0 8846.3 8846.3 5738.0 38027.0 1698900 99450
14-Feb-17 8855.0 8859.8 8821.0 8846.8 8846.8 5526.0 36642.2 1820175 121275
15-Feb-17 8854.0 8859.0 8762.0 8777.2 8777.2 10376.0 68467.6 1963875 143700
16-Feb-17 8780.1 8828.0 8767.0 8821.3 8821.3 10893.0 71934.9 2328075 364200
17-Feb-17 8870.0 8900.0 8831.1 8857.6 8857.6 25990.0 172686.1 3144225 816150
20-Feb-17 8847.0 8912.5 8840.9 8904.1 8904.1 42049.0 280098.4 5450550 2306325
21-Feb-17 8913.2 8954.1 8892.2 8941.7 8941.7 115626.0 772995.9 11674725 6224175
The Deference is in time, you are buying time together. what does it means.The buyer is expecting or fearing that,right now is loss prevention needed
and he is confident for a time in advance.
This tells us a change is going to happen. ok? Now, it was mention in that tread, that it is constantly happening in every contract, and like the volume it has that much importance only.
and like the volume , we watch the percentage. check above, that i mentioned a one thread rollover considered normal, who approve all this???
Off course every one has his own approach and understanding, as there is a contrarian view in all indicators, either OI, or VIX, or market profile, in everything.
I have no argument,that i am fully right.
Every trader think he is right. that is how/why the market is running. if it is the other way. the market will stand still.