Contract Roll
Also known as: futures rollover, rolling the contract, contract rollover, roll date
What is it?
A contract roll is closing an expiring futures position and reopening the same exposure in the next contract month, so the position survives past the expiry date. Suppose you are long one December crude contract from $78.40. On the roll you sell December at $79.05 and buy March at $80.30.
- 1Volume starts leaving the front month. About a week before expiry, open interest migrates to the next contract. The expiring month's spread widens as its book thins out, which makes the roll date a liquidity decision rather than a calendar one.
- 2Close the expiring position. Sell the one December crude contract at $79.05. The trade that opened at $78.40 is now realized: 65 ticks at $10, or $650 banked. Nothing about this leg is provisional.
- 3Reopen the same size in the next month. Buy one March contract at $80.30. Exposure is identical at 1,000 barrels, but the new position's profit and loss is measured from a cost basis $1.25 higher than the one you left.
- 4Pay for the switch, on both legs. A roll is two real transactions: two spreads and two commissions. Carried for a year through monthly rolls, that is twelve extra round trips charged against the same single idea.
- !Miss first notice day and the roll is made for you. On a physically settled contract, first notice can arrive days before expiry. Leaving it late means a forced close at market, a fee, or a delivery obligation your account was never set up to meet.
Your exposure is unchanged - still 1,000 barrels - but two things did change. The December trade is now realized at 65 ticks, or $650. And the new position starts from $80.30, so its own profit and loss is measured from a cost basis $1.25 higher than the one you just left.
A roll is two real transactions, not an administrative event. You pay the spread and the commission on both legs, so a position carried for a year through monthly rolls has paid twelve extra round trips. Timing matters too: volume migrates to the next month a few days before expiry, so rolling late means trading the thinnest book of the contract's life.
Why it matters: Rolling is what keeps a futures position alive past expiry, and each roll resets your cost basis and charges another two spreads and commissions.
Roll cost = (new contract price - old contract price) + both spreads + both commissions
Every roll is a real transaction with its own spread and commission, so a year-long position held through monthly rolls pays twelve extra round trips.
Real-world example
Closing December crude at $79.05 and reopening in March at $80.30 keeps the same 1,000-barrel exposure, but the new position starts $1.25 higher and has paid two more spreads.
How SignalBots handles it
SignalBots states an exit condition on every signal, so a trade is closed on its own terms instead of being inherited into a new contract month by default. See /risk-warning.
Pro tip
Roll on the day volume actually migrates to the next month, not on expiry day - the new contract's spread is tightest once most of the open interest has already moved.
Common pitfalls
Forgetting a physically settled contract's first notice day, which can arrive days before expiry and force a close or an unwanted delivery obligation.
Frequently asked questions
Does rolling change my profit or loss?
It realizes whatever the old contract had made or lost and starts the new one from a different price. Your total is unchanged at that instant, but it is now split into one closed trade and one fresh position with a new cost basis.
When is the best time to roll?
On the day open interest visibly moves to the next month, usually several sessions before expiry. Rolling earlier means trading a contract that is still illiquid; rolling later means trading one the market has already abandoned.
Can I roll as a single order?
Yes - most platforms offer a calendar spread order that sells the near month and buys the far month simultaneously at one quoted difference. It usually fills at a tighter net price than legging the two sides separately.
Do CFDs on futures roll too?
Many do, and the broker applies a cash adjustment so the price gap between contracts does not create a windfall or a loss. Check how your broker handles it, because the adjustment method and any roll fee vary between them.
What happens if I simply do nothing?
A cash-settled contract expires and pays out the difference. A physically settled one can leave you with a delivery obligation, which is why brokers typically force-close it before first notice day - at market, and often with a fee.
Trading involves substantial risk of loss. Historical and backtested results do not guarantee future performance. Read the full risk warning.
