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| Oil Rollover Explained | |
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Unlike Spot foreign exchange, the Oil contracts are based on the ICE futures price (Front-Spot Month). This futures price is the largest price benchmark for the Oil industry worldwide.
Futures contracts EXPIRE because they are related to a definitive date and there are many months traded.
(The forward prices can be higher or lower depending on market conditions).
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Expiry Date |
Price |
| September |
2008 |
14/08/08 |
$113.47 |
| October |
2008 |
15/09/08 |
$114.85 |
| November |
2008 |
16/10/08 |
$115.85 |
| December |
2008 |
13/11/08 |
$116.70 |
| January |
2009 |
16/12/08 |
$117.40 |
| February |
2009 |
15/01/09 |
$117.92 |
| March |
2009 |
12/02/09 |
$118.24 |
| April |
2009 |
16/03/09 |
$118.44 |
| May |
2009 |
15/04/09 |
$118.60 |
| June |
2009 |
14/05/09 |
$118.66 |
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In order to remove final day volatility at AxisTrader we switch from using the front month and into the second month one trading day prior to the exchange expiry above.
Using the example above when Brent for September expires, the October price needs to be used and the price will increase by $1.38. This is obviously not a price rise in oil but just a move to a new reference price and therefore no profit or loss will be incurred as a result.
In order to make sure this does not cost, a cash adjustment needs to be made and please find two examples below:
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Rollover Examples
Example 1
Long position of 1000 barrels @ $113.47
Cash adjustment of - $1,380 is made on account
Profit of $1,380 is made on open position
Net financial effect is zero.
Example 2
Short position of 2000 barrels @ $113.47
Cash adjustment of +$2,760 is made on account
Loss of $2,760 is incurred on open position
Net financial effect is zero.
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Investing in margin foreign exchange and other derivatives can be risky and these products are not suitable for all investors and traders.
The information on this page is of general information only and does not take into account your objectives, financial situation or needs and
you should consider the information in light of these objectives, financial situation or needs before making any decision about whether to
acquire these products. We recommend you consult your financial adviser before you acquire or continue to hold these products.
A Product Disclosure Statement (PDS) is available by contacting AxisForex Group Holdings Pty Ltd (Axisforex) on 1300 851 950 or by clicking here.
Information about our services, including our fees and charges is contained in our Financial Services Guide, which is available at those sources.
You must consider these documents in deciding whether to acquire or continue to hold these products.
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