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Cost of rolling futures automatically vs. manually


Doggie52

Question

Hi,

I'm wondering how pricing works for rolling of futures and forwards. I tried searching for this but couldn't find anything that answered the question.

Firstly, do "roll" or "spread"-type orders exist on the IG platform? Can I execute a roll myself or am I forced to outright sell and then outright buy the next contract?

Secondly, say, hypothetically, I had two futures positions on your platform.

  • For one, I let it automatically roll me into the next month using the auto-roll.
  • For the other, I execute a roll myself (again, can I actually do this or will it be outright sell + outright buy?).

Which approach would lead to the lowest spreads and overall costs, assuming the two approaches are executed at the same time?

Thanks in advance for any help!

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Hi @Doggie52

Thank you for the query

We have automatic and manual rollovers. Automatic rollovers will rollover your positions automatically close to the expiry of the contract. This option can be enabled on My IG>Settings>Rollovers. You can find details on how this is done in the market info section on the platform. There are slight differences depending on the market. Please see the following example of how we treat indices:

image.png

Manual rollovers are done when you do not want to wait to expiry. You would then call in, a dealer would quote you a closing price for the current contract and an opening price for the following contract.

In all cases rollovers involve realising the profits/losses sustained in the previous contract before moving on to the new contract. Auto-rolling a position and outright buying and selling theoretically results in the same spread charges applied, with the exception being share forwards where we offer a concession on market spread. 

I hope this helps. All the best

Anda

 

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On 11/10/2021 at 16:01, AndaIG said:

Hi @Doggie52

Thank you for the query

We have automatic and manual rollovers. Automatic rollovers will rollover your positions automatically close to the expiry of the contract. This option can be enabled on My IG>Settings>Rollovers. You can find details on how this is done in the market info section on the platform. There are slight differences depending on the market. Please see the following example of how we treat indices:

image.png

Manual rollovers are done when you do not want to wait to expiry. You would then call in, a dealer would quote you a closing price for the current contract and an opening price for the following contract.

In all cases rollovers involve realising the profits/losses sustained in the previous contract before moving on to the new contract. Auto-rolling a position and outright buying and selling theoretically results in the same spread charges applied, with the exception being share forwards where we offer a concession on market spread. 

I hope this helps. All the best

Anda

 

Hi Anda,

I don't feel like this answers the question - is auto-rolling cheaper or same price as manual rolling, again assuming they are happening at the same time?

Also, what I'm getting from your answer is that manual rolling involves calling the desk and cannot be done online?

Best,

Douglas

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Hi @Doggie52

Its the same charge, the same spread is applied in both cases if they are happening at the same time. The only exception is shares as we offer a concession on market spread. Thus in this case only it would be more expensive to sell the previous contract and purchase the next online. Yes manual rollovers are done by our dealers but you can essentially do the same online. 

Thanks

Anda

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