Rollover

Rollover is the process of closing an expiring futures contract and simultaneously opening a new position in the next month's contract to maintain continuous exposure to the underlying commodity or asset without taking physical delivery. As each contract approaches its expiry date, traders who wish to maintain their position roll over by selling the near-month contract and buying the far-month contract. The cost or benefit of rolling depends on whether the market is in contango (far-month price higher, creating a roll cost) or backwardation (far-month price lower, creating a roll benefit). In Indian commodity markets, rollover activity increases significantly in the week before MCX contract expiry, and rollover data is closely tracked as a gauge of market sentiment.