Rollover data shows the futures contracts carried forward from the current expiry month to the next. This helps investors in gauging market sentiment as high rollovers indicate continued interest in the current market trends (can be bullish or bearish), while low rollovers indicate declining trader confidence in the same. This data is commonly used to predict short-term market trends.
Futures rollover means that traders close their current month's futures contracts while opening new ones for the next month. This helps shift their position to the new contract without changing their market stance, thus ensuring continuity in their trading strategy.
Rollover is calculated as the percentage of open interest (OI) in the futures contracts closing in the next month as compared to the total OI of all the open contracts i.e. Rollover % = (OI in Next Month Contracts / Total OI) × 100
Yes, rollovers also occur in options. Traders close their current expiry option positions and open new ones in the next expiry in order to maintain their market stance. This practice is common when traders expect the underlying asset's trend to continue on. These rollovers help avoid the risk of contract expiration while taking advantage of the strategy.
Rollovers reflect trader sentiment and expectations for the next periods of trading. A high rollover indicates strong interest in trend continuation, while low rollovers may signal reduced confidence or lack of interest in the asset trend. This data can be viewed in tandem with price and volume analysis to predict market trends and potential volatility.
