We have all heard about rollovers & some even the rollover cost, but how do we interpret & how do we see if it signals a change in price trend
the definitions we’ve already laid out in our post on our post–>
F&O data … the basic fundas
Essentially rollover% is an indication of how much % of positions is getting rolled over to the next month ( be it long or short) .. and a higher rollover% indicates that the base direction for the next expiry action is set strongly by the bulls/bears prior to its beginning itself.
And whether the price trend reversal will be up or down can be seen clearly by a positive/negative or a change in the rollover cost which essentially in the price of next month future – current month future expressed as a %percentage premium/discount
So wondering how the rollover% and especially the rollover cost works out during the expiry / rollover week and what it gives a hint of ?
Well, what better way to showcase it in various scenarios than through a single ‘selfie’ to understand pic –>
the above pic is is for a month trend.. to see expiry day trend you can choose daterange as ‘1d’, so that you can see if there are any last day rollcost changes/reversals happening in long/short buildups , indicating where the buy/sell pressure is taking place.
to see what how you could have made money on the last trading day of the expiry see this example–>
To view this live in one-single click you can directly goto our directly created ‘Rollcost’ view template in the ‘Trends’ module –> https://www.myfno.com/#trends/ALL/rollcost