A rollover takes place when a contract is due to expire and the investor opens an equivalent with a longer date. Normally, the term is used to refer to either retirement portfolios or contracts such as futures. When rolling over a retirement portfolio, investors may escape taxation if they carry out the rollover in a certain manner and limit the number of rollovers to one per month. A retirement rollover may or may not involve expired securities.
Another use of the term rollover is in futures and forward trading, where contracts expire on a given date either through physical delivery or cash settlement. Especially when dealing with contracts where physical delivery is possible and undesired, rolling over these contracts in time is essential for most investors. Unlike the rollover of a retirement portfolio, this sort of rollover will almost always incur charges.
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