The concept of expiration turns futures contracts into finite instruments. If you`re trading stocks or currencies, there`s no stock or forex expiration date to keep in mind – but there are expiration dates for futures! If you want to trade these exciting products, you`d better be able to answer the question, “When do futures expire?” Suppose a speculative trader buys a gold futures contract with an expiration date of August 27, 2021, which has a final trading day on August 26, 2021. If the trader does not sell the contract before the end of the day on August 26, the contract must be settled by delivering the underlying asset. Most contracts also include a cash settlement option that relieves both parties of the physical exchange or delivery of the underlying assets. In an analysis conducted by Arcane Crypto for Bitcoin`s average return between January 2018 and August 2019, it was found that a negative return of 2.2% on Bitcoin was achieved before the CME futures settlement date. The expiration dates of futures products traded on other exchanges can be found in the same way on the website of the corresponding exchange. In addition, some trading platforms also indicate when a futures contract expires. To see the expiration date of your specific futures contract listed on the ICE or Intercontinental Exchange: In general, most futures contracts result in an exchange of financial instruments or a cash settlement rather than a delivery of the physical commodity, as most market participants hedge or speculate. The last trading day is the last day a futures contract can be traded or closed. All contracts outstanding at the end of the last trading day must be settled by delivery of the underlying physical asset, exchange of financial instruments or consent to monetary settlement. Specific agreements that cover these potential outcomes are included in the futures specifications and vary from security to security. Futures have an expiration date because farmers and commercial commodity producers use the futures market to buy or sell goods at a certain contract price at a future time.
In this article, we will explore the impact of contract settlement data on the price of Bitcoin on a larger scale. Let`s dive in. Whether you`re studying an ES futures expiration schedule or an expiration schedule for gold futures, a few questions will probably come to mind. Here are answers to some of the most common: If an investor`s contractual position is not closed until the last day of trading, they are supposed to proceed with the delivery. They then receive delivery notifications and must arrange the final delivery of the underlying assets. This is also the reason why most short-term traders leave their forward positions before they expire, as they do not want to physically buy or sell the underlying product. If the trader wants to maintain his position in the underlying product, the trader can place a trade in another futures contract with a more distant expiration date. Most futures contracts are only held after expiration, so there is no exchange of, say, barrels of oil.
On the contrary, traders simply make money through price fluctuations in the futures contract after their trading. You can also search for the expiration date on the website of the exchange where a contract is listed. Here`s how to see the expiration date of your specific futures contract listed on a cme Group exchange: Many other types of futures contracts expire on different dates, depending on the exchange that settles the contracts. Note the expiration date of the specific contract you are negotiating. it is indicated in the language of the contract. Since Bitcoin is set in USD rather than BTC, it is quite easy for traders to manipulate their futures position in their favor. Some derivative contracts allow trading on the expiry date until a certain time of day. In this case, the last trading day is the expiration day. Quarterly contracts are offered once every three months or four times a year.
These questions are useful when applying longer-term trading strategies because liquidity is present, although the expiration dates of futures contracts may be further away. Essentially, a quarterly expiration of futures (or quarterly expiration of options) gives market participants more time to take advantage of broader price trends. A futures contract is a legally binding and perishable security. .