Automatic rollover products are instruments whose underlying rate is tied to contracts that expire throughout the year and their price is automatically rolled over to each new contract period.
Automatic rollover products at Skilling include;
When the contract reaches this automatic rollover date Skilling also automatically rolls over all open positions and orders to the next contract, free of charge.
As the new contract period changes the instrument’s rate (price), a rollover adjustment is made in order to make sure that this does not affect the valuation of the new open position and equity level.
What is a rollover adjustment?
A rollover adjustment is a compensating adjustment that is made on a CFD contract whenever the underlying contract reaches its expiry date and an automatic rollover is in place for the instrument.
The automatic rollover ensures all open positions are automatically rolled-over to the next contract and to the new instrument rate (price). To make sure there is no effect on the valuation of the open position, a rollover (swap) adjustment is made to the position.
How does a rollover adjustment work?
When the instrument rate (price) is rolled over, the value of your position still reflects the impact of the market movement, based on the original opening level, position size and instrument spread.
If the new contract is being traded at a higher price, all Buy positions will receive a negative Swap adjustment, whereas Sell positions will receive a positive Swap adjustment. If the new contract is trading at a lower price then all Buy positions will receive a positive Swap adjustment, and Sell positions will receive a negative Swap adjustment.
Example of rollover adjustment calculation
You hold a Buy position of 100 units of Coffee CFDs.
Coffee CFDs rates at the time of rollover:
Existing contract Buy rate = $221.30
Existing contract Sell rate = $ 221.25
New contract Buy rate = $222.50
New contract Sell rate = $ 222.45
Swap Adjustments calculation:
Sell Rate Difference = [New contract sell rate] - [Existing contract sell rate] = $222.45 - $221.25 = $1.20
Buy Position Adjustment = - ([Amount of units] * [Sell rate difference]) = - (100 * $1.20) = - $120
Summary: You will continue to hold the same position of 100 units of Coffee CFDs. An adjustment of -$120 will be added/subtracted. Your equity remains the same.
Stop Orders and Limit Orders are not adjusted to reflect the new rate (price) of the instrument in the new contract. In order to avoid your trades being closed out, we recommend that you always take into account the new contract price change when you set your orders.
Rolling Dates for Skilling’s Automatic Rollover Products
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