Futures Rollover – What Does It Mean Exactly? How Does It Impact Nadex Traders?
This week, the Silver and Copper futures markets will rollover. For a trader, this information is essential. How accurate can trades be if they are placed based on data or volume from a previous futures calendar month? What is rollover and why do futures rollover?
“Rollover” is the term used in the futures trading industry to describe the time when the majority of trading volume is going to move to a different contract month. For example, traders recently moved from trading the June E-mini S&P 500 contract to the September E-mini S&P 500 contract. The move takes place on various dates, depending on the market. Some futures rollover every month, some rollover every quarter and some rollover on a variety of schedules.
When rollover takes place, the majority of volume will then shift from the currently traded contract month, to the next contract month for delivery or cash settlement. When trading any futures market, traders want to trade where the volume is trading. Nadex has binary and spread options that are derivatives of futures. They will settle based on a specific future contract.
The pricing of the option is also based on a specific contract. So, it's important to understand and look at the right contract in the futures market when making decisions on Nadex. Nadex rollover dates may vary from the futures rollover dates in order to line up with expiration dates and times.
Nadex has contracts that follow futures on Indices (US and Foreign), Energies, Metals and Agriculturals. Their currency derivatives follow spot forex so traders do not have to deal with rollover for the underlying data. Although, traders may want to know the right currency future to review so they can use currency future volume when trading spot forex.
In any case, traders want to make sure they are looking at the right future when rollover comes around. Nadex does help in this process by putting the name in all contracts of the month that the contract is following: e.g. (SEP for September, DEC for December).
To keep informed of the Nadex rollover dates, so traders know when to update their charts, look at the nadex scanner at www.apexinvesting.com, and click on the Nadex Information Tab. You are able to access the Nadex calendar from a menu on the website, and from the scanners for your convenience. Also, you can click on Current Underyings to see all markets and instruments. This also shows which ones you should currently be looking at on your charts in order to make your trading decisions on Nadex Binary Options and Spread Options. The APEX Nadex Binary Scanner and Spread Scanner make trading these instruments easy. You are able to quickly scan and decide which contract you want to trade based on risk, reward, time, and price, besides offering other features to easily manage your trades.
Below, you can see an example of the calendar from the APEX website. Going back to Silver and Copper, you can see Nadex will be rolling those contracts over on Friday June 27th. Therefore, current contracts (intraday and daily) will remain using July until Thursday at 6 PM ET. However, weeklies or Friday expirations have already begun using September. Weekly contracts are using September, since that expiration time will fall on Friday, when the new expiration month is active, thereby making sure there is no changing of contract months in the middle of your trade!
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