I need some help to understand Futures rollover. Please consider below example.
Consider that I bought SBI JUL Futures contract (at price: 274.95 ; lot size: 3000) by paying the NRML Margin 1,03,462. Assume on 27-Jul the future trades at 260. I wish to rollover the contract to Aug.
On exiting the contract for rollover on 27-Jul, Should I incur a loss of (14.95 * 3000 = 44,850).
If so, will I be left with a margin of (1,03,462 - 44,850 = 58,612) ?
What would be the net amount required to rollover the contract (Aug Contract) ?
In this case Rollover means just closing current month contract and opening next month contract. So as mentioned above if 1 lakh is needed to enter into contract then after booking your losses you need the same amount to enter in to next month contract, you need full margin of 1.03lakhs. Also futures are settled daily means adjustments to profits or losses will happen on daily basis based on daily settlement price. Go through this link to get better understanding on trading futures.
Firstly, if you don’t have minimum SPAN margin in your account, positions won’t be allowed to be held overnight. Which is around Rs 62000 in this case (Exchange penalty kicks in if margin drops below this for an overnight position). If there is any intraday loss, you have to make good of the money before market closing, otherwise positions get auto squared off.
Rollover is you essentially selling your july contract and buying an August contract. If july is say at 260 and aug at 261, your rollover cost is this 1 point or Rs 3000 + all taxes/charges for the two trades. To take a new August position you will need this Rs 1.03lks.
