Understanding rollover and calendar spreads - The Coach's Playbook

What is a rollover?

When futures contracts near their expiration date, traders with open positions have to choose whether to close out their positions entirely or roll them into a new contract month. This process is known as rollover, and it happens in every futures market.

Rollover indicates that the front month is expiring, and traders need to “roll” their positions to the next month. Markets tend to act differently during roll week because the focus of institutional traders is to reposition their trades as best they can. This means traditional trading methods kind of go out the window, because it’s all about rolling as cheap as possible.

Here’s what our coaches have to Say

2 ways to roll positions

When it comes to order execution for rollover, you have two options: you can either use a calendar spread or a leg spread.

Calendar spreads

Calendar spreads represent the difference in price between the front month and the back months. Because of the way these are quoted and traded, calendar spreads are an easier method for rolling a position.

Leg the spread

Your other option is to “Leg” the spread, which simply means closing out the position in the front month and reopening it in the next month. Risk grows exponentially when you try legging spreads, simply because the markets move, and you could end up chasing a bad price.

How To Know When The Roll Is Coming:

  1. Check in at the CME Group Website.
  2. Sign up for Topstep’s Weekly Kickoff newsletter.
  3. Simply watch the volume for each product month-to-month.

Remember to stay up-to-date on the products you’re trading!

Trade Well!

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