Comment on Query of the Day
commented on
16 Aug 2013, 12:59 PM
What does Rollover mean and what are the charges involved?
Typically a beginner trader usually gets confused with what rollover actually means, here is the explanation for the same.
When you buy any future or option, it will have an expiry day(last day until which you can trade that contract). So for example Nifty 29th Aug future, you can trade only till 29th Aug 2013. What if you want to hold nifty future to September?
In such a case you have to exit nifty august future and take a fresh position in the September future which would be then valid till in this case 26th September 2013. This process of moving your position from one month to another is called as rolling over. This rolling over can be done anytime before the market closing on 29th Aug 2013.
So for example if you have bought nifty august future at 5600 and on 27th Aug assume nifty future is 5560, you now decide to rollover your position to September since you want to continue your nifty future buy position. So basically what you will do is sell the Nifty August future and buy the Nifty september future which you can now hold till 26th September.
Charges involved?
When you sell the August future you have to pay brokerage & charges and when you buy back the September futures you have to again pay brokerage & charges. Charges are similar to a normal buy and sell transaction.