How do rollover expiration dates work?

 

Any of the existing pending orders (i.e. Take Profit, Stop Loss, Entry Limit or Entry Stop) that has been placed on an instrument will be adjusted to symmetrically (point-for-point) reflect the difference between the price of the expiring contract and the price of the new contract on rollover date, at 21:00 GMT. Customers who hold positions open at 21:00 GMT on rollover date will be adjusted for the difference between the price of the expiring contract and the price of the new contract through a swap charge or credit which will be processed at 21:00 GMT, on their balance. 

To reflect the new Future contracts, the automatic rollover will include a charge equivalent to the spread of the CFD. This effectively aligns to the cost that you would have incurred if your CFD position would have been closed on the expiration date and you would open a new CFD position based on the new Futures contract. If the price of the new contract is higher than the price of the expiring contract, long position (buy) will be charged negative rollover adjustment and short position (sell) will be charged positive rollover adjustment.

Let us assume that the expiring contract on Oil trades at $70 and the new contract trades at $78. If you have a BUY position of 10 contracts on Oil, you will register, when rollover is due time, an artificial profit of $8 (78-70) per each contract opened, as Oil price increases from $70 to $78, in favour of long trades.

If the price of the new contract is lower than the price of the expiring contract, long position (buy) will be charged positive rollover adjustment and short position (sell) will be charged negative rollover adjustment.

Let us assume that the expiring contract on Oil trades at $70 and the new contract trades at $78. If you have a BUY position of 10 contracts on Oil, you will register, when rollover is due time, an artificial profit of $8 (78-70) per each contract opened, as Oil price increases from $70 to $78, in favour of long trades.

Therefore, a negative rollover adjustment will be processed in your account: Rollover adjustment = 10 contracts x contracts difference (71 - 68) x (-1) + 10 contracts x Oil Spread x (-1) = -$30 - $0.30 = - $30.30.

If you have a BUY position of 10 contracts on Oil, you will register, at rollover time, an artificial loss of $2 per each contract opened, as Oil price drops from $71 to $68 in disadvantage to long trades.

Therefore, a positive rollover adjustment will be processed in your account: Rollover adjustment = 10 contracts x contracts difference (71 - 68) + 10 contracts x Oil Spread x (-1) = $30 - $0.30 = + $29.70.

 

To avoid CFD rollover close your open position before the rollover date.