Continue reading...Every March, and other quarterly months (June, September, and December) the futures contracts that track interest rates, currencies, and the stock index futures come to the end of their contract life, and expire. This necessitates the need for traders engaged in these markets to exit these contracts and roll them over to the next quarterly month.
This phenomenon is unique to the futures market and to someone new to trading these markets it can sometimes be confusing. Because March is the end of the quarter, the “Rollover” event is happening throughout the month across most futures contracts, particularly in the financials since they expire quarterly. We tend to get many questions from our newer futures traders regarding this topic, and although I’ve written about this subject in the past, I think it’s worth revisiting. In this article I’ll attempt to demystify, and more importantly simplify this rollover occurrence.
Because futures contracts are obligations between buyers (to take...
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