Articles on: Trading

Rollover Adjustments

A rollover adjustment occurs when a futures contract reaches its expiration date. To continue trading, traders must switch from the expiring contract to next month's upcoming contract. This usually happens towards the end of each month.

Rollovers affect all commodities including metals, grains, and energy markets. Typically, the difference in price between the expiring and upcoming contract is quite small. Sometimes, unforeseen circumstances make it difficult to sell the expiring contract. This drives the price of the expiring contract down, relative to the upcoming contract.

It's important to note that you cannot profit from the difference in contract prices on traditional exchanges.

Rollover Adjustments on Morpher

On traditional exchanges, traders must settle the expiring contract through cash or take physical delivery of the underlying commodity. On Morpher, a rollover adjustment automatically corrects the price difference between the two contracts.

Trading commodities on Morpher is made possible by virtualizing market data. This means that the underlying futures are never actually traded. You need to understand how rollover adjustments may affect your trading experience:

Existing Positions

If you have a position in a commodity that is undergoing a rollover adjustment, your returns will not be affected. Your position will remain active and be adjusted to reflect the change in price.

Stop Loss & Take Profit

If you have any limit orders or protective stops set for a position that is undergoing a rollover then they will be canceled.

Restricted Trading

All trading for the market undergoing a rollover will be paused starting 1 day before the futures expiration date. Trading should resume after the market opens on the day the futures contract expired. Please note that in rare situations trading may remain paused up to one day after the futures expiration date.

Updated on: 22/03/2024

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