Rollover Days for Commodity Contracts

Discussion in 'Trading' started by tradersboredom, Dec 11, 2008.

  1. tradersboredom

    tradersboredom Guest

    Why do some brokers force traders to pay the spread and some brokers don't for rolling over the contract.


    the spread is like $1-$2 on rollover day.
     
  2. tradersboredom

    tradersboredom Guest

    http://www.odlmarkets.com/oil/oil_rollover_explained.php



    Rollover Examples


    Example 1
    Long position of 1000 barrels @ $113.47

    Cash adjustment of - $1,380 is made on account

    Profit of $1,380 is made on open position

    Net financial effect is zero.


    Example 2
    Short position of 2000 barrels @ $113.47

    Cash adjustment of +$2,760 is made on account

    Loss of $2,760 is incurred on open position

    Net financial effect is zero.


    --------------------------------------------------------------------------------



    When the ODL oil price is rolled from one month into the next this is booked at the official futures settlement price on the exchange (e.g. $1.38).

    Every other trader in the market would need to pay “the spread” which could be a cost of anything up to about 10 cents ($1.33/ $1.43).

    At ODL we do not pass on this cost to our customers.