Rollover in F&O segment has been explained by A1 Intraday tips here and that is how intraday traders can rollover their status in f& o segment in NS. Last Thursday of every month is when Future and Options Contract on Stock and Index expire in India. There are three contracts for trading in f& o segments at any point of time. Market variability increases to highest point at time of expiry of F& o segment.
Both intraday short sellers and intraday buyers are interested in closing out their futures states in future market and rolling over to next month. In simple word rollover may be known as exiting the current stance from the near month and simultaneously making a new stance in the far month.
Process of rollover in F&O segment
Derivatives segments of share markets which is known as “F & O” in Indian stock markets. Rollover is basically done in these derivatives and not directly in shares. The positions that have been taken in the “futures” will be squared off at the end of “futures” closing date. Despite it can be done that one can square off the status in the near month and start a new position in “mid-month” or “far month” in futures and that is “Roll-over”
It can be said simply as carry forward in next F & O segment. There are three valans in F&O segment:
- Ongoing recent F& o segment (Near month)
- Next month F& O segment (Mid-month)
- Distant month (After mid-month)
Inspecting the truthfulness and exactness
Expiry or end of valans is when traders generally roll over. If traders are rising they do roll over their purchasing status in next F& o segment and they are falling they do rollover their selling position in next settlements. Traders can roll over in F & O segment stocks and not in any other segments. Every F & O segment expires on last Thursday of the month and in case it is a holiday the day before it that is Wednesday is fixed for it.
Derivative segments of trading are traded by traders who take more risks with larger hopes. F & O needs more funds so gain and loss may be abundant in comparison to delivery based trading. Also, a trader needs to abide by certain rules and regulations in f& o segment. Some traders without knowing the whereabouts of F & o trading in Indian share market enter F & o segment.
A deeper insight finally
Mr. X bought 1 Lot (1000 quantity) of Tata steel in August, 2016 F & O segment @ 680. Now he is a bullish in Tata steel and expects it to go up in the following month F& O segment, he will carry forward his segment in September f& o segment.
At first Mr. X will sell 1 lot of Tata steel in August segment and simultaneously he will buy 1 lot in F &o segment and so Mr. X has roll over purchasing position of Tata steel in NSE market.