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The mechanism of rollover, what the rollover percentage tells you, and cost of carry
Published by The Retail Trader · AUG 09, 2026 · Features
Around every monthly expiry, one word is heard again and again: rollover. Its meaning is very simple, but what is drawn from it is not so simple.
Your position is in the current-month contract and it is about to expire, but your view is still alive. So you close the current-month position and open the same position in the next-month contract. That is rollover — two trades, one intent.
It can also be done as a spread in a single order, so that both legs go through together and the price doesn't run in between.
Around expiry, a figure comes out showing what percentage of positions shifted to the next month. High rollover means people are carrying their view — commitment has been built. Low rollover means people are booking and leaving.
But the number alone is not enough. Along with rollover, one also looks at whether the roll happened on the long side or the short side, and what price was doing during that time. High rollover in a falling market can also be bearish commitment.
Next month's futures is often at a slightly different price from the current one. This difference comes from things like interest and dividends, and it is called cost of carry. When you roll, this difference either goes out of your pocket or comes into it.
Three costs when rolling:
• Cost of carry — the price difference between the two contracts.
• Charges on two trades — closing the old one and opening the new one, on both.
• Bid-ask spread — on both legs, and on the last day of expiry it can be wide.
Don't make rollover a habit. Many people roll because the position is at a loss and they don't want to book that loss. That is not rollover — it is dragging a wrong trade into next month, and on top of that you have paid extra costs.
There is only one justification for rolling: if you had no position today, would you open it fresh for next month? If yes, roll. If not, that is an exit, not a roll.
This article is for educational purposes only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advice. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.