Futures Rollover: When and How to Roll Your Contracts

Futures contracts expire. If you want to keep a position beyond expiration, you close the expiring contract and open the same position in a later one. That is a roll. Day traders also need to know about rolls, because liquidity moves from one contract to the next and charts can show gaps.

Why rolling is needed

Each futures contract has a last trading day. After that, it either settles in cash or moves toward physical delivery. Most traders want neither, so they move to the next contract month, the new front month, before expiration.

When to roll

Liquidity shifts to the next contract before the old one expires. Common signals:

• Volume and open interest in the next contract overtake the current one.
• The exchange's roll calendar. For equity index futures, quarterly contracts typically see the roll about a week before expiration.
• Your broker's or platform's default. Many platforms switch the "continuous" symbol on a fixed schedule.

Physically delivered contracts have additional dates, such as first notice day, after which you could be assigned delivery. Most brokers require speculative positions to be closed before then.

How to roll

You can roll with two orders, closing one month and opening the next, or with a single calendar spread order that does both at once. The spread order avoids being partly filled with an unhedged position.

The cost of rolling

• Commissions and spread on two trades.
• The price difference between contract months reflects interest rates, dividends or storage costs. It is not a profit or loss in itself, but it changes your entry price in the new contract.

Rollover and charts

A continuous chart stitches contracts together. At the roll, the price can jump. Some platforms adjust older prices to remove the gap (back-adjusted charts), others do not. When you compare levels across a roll, check which method your chart uses.

Rollover and your journal

A rolled position is two trades: the old contract closed and the new one opened. Some traders also tag them as one campaign so the total result is visible. Make sure each contract month is recognized with the correct multiplier.

In TradeThink

Imported futures trades keep their contract month, and the right multiplier is applied to each. Expired contracts are not counted as open positions. Related: futures basics.