I am quite confused on roll overs. Can someone explain when to roll over based on roll cost . I understand the mechanism but the logic of it is not sinking in. Any examples where a roll over is beneficial.
Name sounds fancy, that’s it. Roll over literally means closing existing position of current month and opening same position in next expiry. So, if you are having long nifty july month future, roll over means close this position and buy august month nifty future. Roll over costs means transaction charges and spread ie your buy price will be different for july month and august month, the difference between two is spread. When it comes to options they add horizontal and vertical roll overs etc, but the essence remain same, close this and open new position.
Thanks Siva. I have bought a July future of jpyinr at 64.02.
Current value 63.88
Jpyinr Aug is at 64.195
Whatever I do I am at a losing position. So people who roll over, why do they do it. Why not exit and take loss. Next month a different story, fresh strategy ? Isn’t it.
Still they think it can go up, so it make sense to do it. It is individuals choice.