Derivative rollover simply means exiting the current months position and creating a simultaneous new position of same type in the mid or far month future contract. In essence, derivative rollover occurs when you book the profits or loss in your current month contracts and open a new position in the next or far month contract.
How To read Nifty Rollover Report and Interpret Nifty Rollovers and Stock Rollovers?
Nifty rollover numbers or stock rollover numbers are generally expressed as a percentage of rolled positions to total open positions. They do not offer much information when analysed on standalone basis. But they get immensely informative when we compare them with their trailing three or six month average and take rollover cost plus price movement into consideration. This comparison provides a great insight into the prevailing sentiment into the markets. As a rule of thumb, investors should focus on following points while analysing rollover report:
Future rollover numbers which are well above their 6 months average with high rollover cost and rising prices are indicative of bullish trader sentiments.
Derivative rollover numbers below 6 months average with low rollover cost and falling prices are indicative of bearish trader sentiments.
Equityfriend team compiles the nifty derivative rollover report every month for investors which they can use to take informed investment decisions. This report is generated on last Thursday of every month (expiry day) and you can use the following dashboard to analyse the same.