Archive · 7 Jun 2025
Economics of Rolling Over Futures Positions
Imagine you're trading future contracts.
A rollover means switching your contract to the next month.
Instead of just sticking with the old contract, you check if you could make more money trading something else.
Consider how much it costs to switch contracts.
Make sure the new contract is worth it, or else you might miss out on better chances.
Also, make sure you consider if your initial investment is still paying off or if you are just avoiding your regret.
Good traders look at these things to make the best choices.
Rollover strategy involves closing near-month contracts and initiating a position in the next month.
Traders often have a time stop to avoid capital lock-up and seek higher returns.
Economics of rollover include comparing expected gains with alternative investments.
Consider the rollover cost, which can be significant due to price differences.
Avoid regret aversion when making trading decisions.
- Who
- A trader
- What
- An economics of rollover in futures trading.
- When
- Published June 7, 2025
- Where
- N/A
- Why
- To discuss factors when rolling over futures positions
Behavioral Biases
Optimal Decisions
Rollover vs. Alternative Investments
Behavioral Biases
N/A
Optimal Decisions
Consider the price of the next-month contract and potential gains on other underlyings to optimize returns.
- Strategy Focus
- Futures rollover
- Key Consideration
- Rollover cost
- Trading Discipline
- Moderate behavioural biases
- Author
- The author offers training programmes for personal investments