Question on Rolling a Futures contract

J

jtTrader

I have never had to roll a futures contract before, but I made need to do this in December if the market does not recover.

My broker is IB. The question I have is, if a futures contract is underwater, can I roll it forward to the next (March) contract without taking the loss December contract?

Meaning, can you roll it forward, where you are maintaining the loss on paper, but not in actual cash.

Thanks for the information

- jtTrader
 
No. Futures are marked to market daily. There is no such thing as unrealized futures gain or loss for tax purposes. Even before you close the December contract you have already taken the loss.

Fortunately you get 60/40 tax treatment.

Martin
 
Sorry, I don't mean for tax purposes. I mean actual dollars lost. You don't lose money on a trade unless you exit the position.

I have not exited the trade, so I have not taken a loss. I'm trying to understand how rolling a contract works.

Is it exiting and re-entering, or it it rolling the loss forward to the next contract?

Thanks,

- jtTrader
 
Check your account, you have already taken the loss. The poster above said it correctly. At settlement each day, the proper amount of cash on a futures position is removed or added to your account, known as marked to market.
 
I am just trying to find out what happens when you rollover a futures position.

You guys a confusing this:

1. Enter S&P long at 1500.
2. S&P goes down to 1490
3. The position is down 10 points.
4. You exit the position and lose 10 points

With this:

1. Enter S&P long at 1500.
2. S&P goes down to 1490
3. The position is down 10 points.
4. The next day the S&P goes up to 1520
5. You exit the position up 20 points

These two positions are not the same because in the second case the trade was not exited at 1490, It was exited 1520. The first trade was exited at 1490.


Back to my original question. What happens when you roll a futures contract?

Thanks,

jtTrader
 
Semantics aside I'll answer the OP.

As soon as you enter the spread your Dec sales (vs the Mch buys) will p/l for keeps against your present longs. If you were trading pit contracts you could choose what prices you'd like as long as the prices are in the day's trading range.
 
Quote from jtTrader:



Back to my original question. What happens when you roll a futures contract?

Thanks,

jtTrader
More...


close your current position and reopen in further out month (back month).


I have not exited the trade, so I have not taken a loss.

you don't have to close the trade to take a loss. see "marked to market" for explanation


your reasoning is correct for stocks but doesn't apply to futures...
 
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