Rolloever costs and spreads -

[deboy]

Hi there,

I'm wondering if anyone can help.

I had a long postition in Natural Gas ,October contract with a company trading CFD's. (I wont reveal their name as i am still awaiting a reply from their Customer service)

They rolled it over on friday (25th) but at a price that was never traded for that particular contract in that day.

The actual NGV9 contract closed the day at 3.959 with a low of 3.795 but my OCT trade was closed out/rolled over at 3.535, over 40 points lower.

And the rollover to the NOV contract was opened at 4.91 with the close of the NGX9 contract being 4.929.

Shouldn't my trade have been closed out at 3.959 (+/- their spread) and then re-opened as it was?

Have i missed something? Or have i been duped out of profits? What price did anyone else get rolled over at?

thanks in advance
joy

 

[LostPigeonCoo]

The actual NGV9 contract closed the day at 3.959 with a low of 3.795 but my OCT trade was closed out/rolled over at#### 3.535 ??####, over 40 points lower.


thanks in advance
joy

3.535?

Did you phone them up? Maybe they change for a roll over spread? How big is that spread?
With DJ Some companys prices are always diffent than actual prices or futures.

So there actual Natural Gas prices may be diffent.

 

[deboy]

3.535?

Did you phone them up? Maybe they change for a roll over spread? How big is that spread?
With DJ Some companys prices are always diffent than actual prices or futures.

So there actual Natural Gas prices may be diffent.

Thanks for your reply..

Just spoke with the dealers at CMC and this is how they adjust at rollovers, to account for the 'volatilty of the instrumet'

Usually their spread is +/- 0.015 so if NG trades at 4.91 , there spread is 4.90/3

At rollever they take the closing price to be the ' actual spot closing price' minus the 'average difference between the 2 contracts'

in this case
NOV was closed trading around 4.91 and
OCT 3.91

so spread of the 2 contracts was 100

therefore the oct rollover price is 3.91 - half the 100 = 3.41

they said. this is to be fair to all the clients whether they are long or short, so in this case the shorts got the benefit.

i guess i'll have to be wary of this next time as it meant half my profits were given back!
i should have closed the position my self the day before at 3.90 and then bought the NOV contract today at 4.9 and kept those extra points.

oh well, you live and learn.

 

[LostPigeonCoo]

You should look around and see if you can get better spreads elsewhere.

 

[montmorencyt2w]

Rollover appears to be a two-edged sword.

 

[LostPigeonCoo]

Rollover on DJ is ok, or stocks.

 

[gbpusd]

Not sure if its my poor understanding or not, but this makes no sense.

If this is how they decide on the rollover price, you can open a position minutes before the rollover, knowing they will close your existing position at a much more favourable price. For example if you had gone short using the prices you provided.

again, i am a newbie, so apologies if its a lack of understanding.