Definition
A rollover commonly means closing or offsetting a contract near expiry and opening a position in a later maturity. It allows exposure to continue without keeping the original contract through its settlement or delivery process. The old contract’s expiry date is not changed.
How It Works
A trader holding a long expiring futures contract can sell that contract and buy a later one, potentially through a calendar-spread order. The later contract can trade above or below the earlier contract. Its size and sensitivity should be checked rather than assuming that replacing one unit always preserves identical exposure.
Key Considerations
Rolling can involve bid-ask spreads, trading fees, execution risk and changes in the futures curve. The price difference is not simply a separately charged exchange fee. Continuous futures charts may adjust historical prices and should not be mistaken for the cash flows of an actual roll. Perpetual contracts generally do not require expiry rolls, although they can have funding payments and other costs.