Understand rollover and rollover cost — Hinglish notes

5.1.7 · Stock-Market › Futures

Rollover Kya Hota Hai?

Ye kyun zaroori hai?

Tum price speculation ke liye trade kar rahe ho, actually Reliance ke 1000 shares kharidne/deliver karne ke liye nahi.
Current month ka contract expire hone wala hai (settlement = forced closure).
Tum apna bullish/bearish view next month mein bhi continue karna chahte ho.

Ye mechanically kaise kaam karta hai?

Expiry se ek din pehle (ya kuch din pehle): Tum apna current month contract bech dete ho (exit).
Saath hi saath: Tum next month ka contract same underlying, same lot size ke saath kharid lete ho.
Net effect: Tumhara directional bet jaari rehta hai, lekin tum "move" ho gaye ho naye contract mein.

Rollover Cost Kya Hoti Hai?

Yeh difference kyun exist karta hai?

Contango (next month > current month): Cost of carry (interest, storage, dividends). Future delivery zyada costly hoti hai.
Backwardation (next month < current month): Convenience yield, supply shortages, ya market expect karta hai ki prices girengi.

First Principles Se Derivation:

Tum long ho: tumne current month $F_{current}$ par kharida, ab tum isse bechte ho aur next month $F_{next}$ par kharidtey ho.
Net cash flow = (next month ke liye paisa bahar) - (current month se paisa andar) = $F_{next} - F_{current}$ per unit.
Total cost ke liye lot size $N$ se multiply karo.

Figure — Understand rollover and rollover cost

Trading Strategy Par Rollover Ka Impact

Long-term Traders Ke Liye:

Contango = baar baar rollover costs profit khaate rehte hain. Har mahine tum premium "pay" karte ho.
Backwardation = rollover credits ikatte hote rehte hain. Har baar roll karne par tum gain karte ho.

Short-term Traders Ke Liye:

Rollover ek mahine mein ek baar hone wala event hai. Agar tum expiry se pehle exit kar lete ho toh impact kam hota hai.
Rollover days (typically expiry se 3–5 din pehle) par increased volatility aur spread widening ke liye watch karo.

Key Tactical Point:

Rollover day par, liquidity current month se next month contract mein shift hoti hai. Spreads wide hote hain, slippage badhti hai. Professionals early (expiry se 5–7 din pehle) roll karte hain isse bachne ke liye.

Active Recall Drills

Recall Rollover Ko Ek 12-Saal Ke Bache Ko Explain Karo

Socho tumne June ke liye ek video game rent ki. June khatam ho raha hai, lekin tum abhi bhi khelna chahte ho. Toh tum June ki game wapas karte ho aur wahi game July ke liye rent karte ho. Agar July ki rental June ke mukable ₹10 zyada cost karti hai, toh woh extra ₹10 tumhara "rollover cost" hai—bina break ke khelna jaari rakhne ki kimat. Futures mein, tum ek mahine ke liye ek price bet "rent" karte ho. Jab mahina khatam hota hai, tum next month ki bet par swap karte ho taaki apni position zinda rakho.

Connections

What Are Futures Contracts – foundational concept
Margin and Leverage – kyun tumhe cash hold karne ki jagah futures chahiye
Marking to Market – daily settlement vs. monthly rollover
Cost of Carry Model – contango/backwardation ka theoretical basis
Calendar Spread Trading – rollover spreads ko strategy ke roop mein exploit karna

#flashcards/stock-market

Futures trading mein rollover kya hota hai?

Expiring contract mein position close karne aur saath hi saath next month ke contract mein equivalent position open karne ki process, taaki settlement ke bina continuous exposure maintain ho sake.

Rollover cost kya hoti hai?

Expiring contract aur next month contract ke beech ka price difference, lot size se multiply karke, jo tumhari position maintain karne ki cost (ya gain) represent karta hai.

Long position ke liye rollover cost ka formula

(F_{next} - F_{current}) \times N

jahan

N

lot size hai.

Agar Nifty July futures 24,500 par aur August 24,620 par trade kare, lot size 50 ke saath, toh long ke liye rollover cost kya hai?

(24, 620 - 24, 500) \times 50 = 120 \times 50 = ₹6, 000

Contango mein rollover cost kaun pay karta hai—longs ya shorts?

Longs pay karte hain (next month zyada expensive hai). Shorts gain karte hain (woh sasta cover karte hain aur higher price par re-short karte hain).

Rollover avoid karne ke liye tum expiry tak hold kyun nahi kar sakte?

Cash-settled contracts settlement par auto-close ho jaate hain (tum bahar ho jaate ho). Physical delivery ke liye poora capital chahiye aur leverage ka purpose defeat ho jaata hai. Trade mein rehne ke liye rollover mandatory hai.

Backwardation kya hota hai?

Ek market structure jahan next month futures contract current month contract se neeche trade karta hai, contango ka ulta.

Costs minimize karne ke liye tum apni position kab roll karni chahiye?

Expiry se 5-7 din pehle, jab liquidity abhi bhi balanced ho. Last 2-3 din avoid karo jab spreads wide ho jaate hain.