what is market rollover in Futures and options terminology ?

Question

In the context of furtures and options stock trading this terminology is used, wanted to understand the defination of this

Answer 1

Wikipedia is your friend. Wiktionary, too, sometimes.

See Definiition 4.

The precise definition that various market participants apply to the generally-understood terminology varies from market to market, and from instrument to instrument, depending on a lot of factors. For precise definitions, check with a specialist.

It's a simple concept in principle, however. To do a rollover, one would buy futures and/or options contracts on the same underlying instrument for the same maturity in the same amount (sometimes, but not always, at the same strike price).

Answer 2

Rollover refers to what people do when a financial instrument matures or expires. For example, someone who owns a two year bond that is about to mature could invest that money in something different -- or he could roll it over into the next new two year bond.

For futures it would mean that someone who is long a futures contract will go long a new futures contract in the same asset once the first one expires.

For options, it could mean rolling over into an option with the same strike and underlying asset. However, if the asset price had moved, the strike price need not be the same. For example, if you bought an at-the-money option on a stock seven months ago and it was way in the money & about to expire -- you would not want to buy another option at the same strike price. You may prefer an at-the-money option instead.