If you are holding a position in the futures contract and at the end of the expiry of the contract you realize that your target price has not reached or you are ending up in a loss then you may want to roll over your position. However, take care to check whether the following month futures contract is trading at a discount or at a premium. If the costs of the following month’s contract are high then this adds to your cost and will diminish your returns. In such cases, it is best if you exit the position and look for some other better opportunity to enter a trade.
In the case that you decide to roll over your position on Bitcoin Trader, it is best if you sell and buy the contract at the same time. If that is not done then the futures trader is legging which is a position that you take if you are a spread trader. It is best that if the contract is a deliverable then you exit and roll over before you get the notice.
This is because if you have entered the delivery period then roll over becomes difficult. In any case, the position has to be rolled before the cash settlement is done which is the final day of trading on the contract. If that is not done then you will have to commit to the outcome of the position.
Check the following before you roll over
If you are planning to roll over your position then make sure that you check that the next contract has a lot of liquidity and that the price action in the chart is similar to the original contract that you had held.
In the agro-commodities sector, you may notice a lot of volatility because of price swings which are because of the outside weather like the diminishing of the supply. There are some short term fluctuations as well in the asset and thus it is important that you monitor well before you choose to enter the next contract.
Rollover in the futures contract can let you keep your positions active and not have to deal with the price fluctuations because of short term movements in the market that is not as per what your outlook on the market was. Thus you can make use of the rollover to limit your loses and stay in the futures position until you wish to.