Contract Month

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DEFINITION of 'Contract Month'

The month in which a futures contract expires. The contract can be delivered during the current month, provided that the terms and conditions set forth in the contract are met. Either delivery or expiration must take place in order to settle the contract.

Also known as the "delivery month".

BREAKING DOWN 'Contract Month'

Futures contracts are similar to options contracts in that they are only valid for a specified length of time. Then the contract either expires or must be delivered. Because delivery takes place in this month, the contract month is also known as the delivery month.

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RELATED FAQS
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    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  2. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  3. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  4. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  5. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>
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    The utilities sector exhibits a high degree of stability compared to the broader market. This makes it best-suited for buy-and-hold ... Read Full Answer >>

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