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Offsetting involves closing a position.

Rollover involves closing a position and opening a new one.

Is offsetting a part of rollover? If not, what is the strategic difference between these two?

What does "maintain the position" mean in rollover?

Why does rollover help to cut costs in current months by buying a subsequent month contract?

A trading example would be highly appreciated. Thank you.

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  • Differences in loss between offsetting and rollover futures? Why does rollver helps to cut cost of current contract? How come rollover the futures maintain the risk position? What is the loss difference between offseting and rollover the contracts?
    – base64
    Apr 29 '20 at 7:51
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Rollover in futures trading (buying or selling your position in a soon to expire contract and creating the same position in a longer contract) is usually driven by the need to either avoid delivery / final settlement processes, or the desire to avoid non-standard trading activity as the contract nears either the first notice date or the last trading date. Many contracts can exhibit increased volatility and / or lowered liquidity as the contract gets closer to expiry. Many traders don't want to participate in that as its not 'regular' behaviour. Additionally, many traders don't want to run the risk of going through a final settlement process.

Mistakes do happen and sometimes close out trades on the last opportunity can be missed or expensive. If its not your core activity, get out earlier. In case something goes wrong, you could still have some time to sort it out.

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