All Collections
Trading
What is Rollover?
What is Rollover?

Find out what is a rollover

Support Team avatar
Written by Support Team
Updated over a week ago

In the context of derivatives trading, a rollover means that a position is extended at the end of the contract date, and a new contract is automatically opened when the old one expires. The price of the new contract may differ from the price of the expiring contract, which would result in gains or losses depending on the direction of the open position.

When this happens, an investor’s account balance is adjusted to reflect the impact of the price difference on the P&L of the position. Specifically, the open positions that will gain from the price gap will see the same amount deducted from the account balance, whereas the open positions that will lose due to the price gap will see the same amount added to their account balance.

Please refer to the example below:

  • Price on old WIG 20 contract: $2005.80

  • Price on new WIG 20 contract: $2006.00

Buy positions will gain $0.20 per contract due to the price gap. The P&L on their position will increase by the said amount and their account balance will be adjusted.

Sell positions will lose $0.20 per contract due to the price gap. The P&L on their position will decrease by the said amount and their account balance will be adjusted.

  • If the price increases, currently open buy positions will have a negative balance adjustment.

  • If the price increases, currently open sell positions will have a positive balance adjustment.

  • If the price decreases, currently open buy positions will have a positive balance adjustment.

  • If the price decreases, currently open sell positions will have a negative balance adjustment.

As a result, the account equity will remain unchanged.

Assume that you hold a buy position of 0.20 lots on WIG 20. One lot carries 20 units, therefore you are long 4 units of WIG 20. The price of the expiring WIG 20 contract is $2005.80 and the price of the new contract is $2006.00. When a rollover occurs, the P&L on your buy position will increase by $0.80. At the same time, a balance operation from our side will adjust your account balance, which will be debited by $0.80. As a result, your account equity will remain unchanged.

Assume that you hold a sell position of 0.20 lots on WIG 20. In this case, you are short 4 units of WIG 20. The price of the expiring WIG 20 contract is $2005.80 and the price of the new contract is $2006.00. When a rollover occurs, the P&L on your sell position will decrease by $0.80. At the same time, a balance operation from our side will adjust your account balance, which will be credited by $0.80. As a result, your account equity will remain unchanged.

Did this answer your question?