What is Rollover?
Rollover is a feature of certain financial instruments that allows the holder to extend the period of the contract by rolling it over to the next period. It is a way of keeping one’s position open without having to close it, and then re-open it at a later date. This can be beneficial to the holder, as it may allow them to take advantage of changing market conditions.
Examples of Rollover
One of the most common examples of rollover is in the foreign exchange market. When trading currencies, the holder of a currency pair can choose to rollover the position to the next day. This allows them to keep the position open, and if the exchange rate of the pair has changed, they can take advantage of the difference. Rollover is also used in investing in futures contracts. A futures contract is an agreement to buy or sell an asset at a specific price at a specific future date. The holder of the contract can choose to rollover the position to the next contract period, thus avoiding having to close the position and re-open it. In addition, rollover is commonly used in the stock market. A trader can choose to rollover their position in a stock, allowing them to keep the position open and take advantage of changing market conditions.
Conclusion
Rollover is a useful feature of financial instruments that allows the holder to extend the period of the contract without having to close it and re-open it. It can be used in foreign exchange markets, investing in futures contracts, and in the stock market. By taking advantage of changing market conditions, rollover can be beneficial to the holder of the contract. For more information about rollover, please see: