First Notice Day

AAA

DEFINITION of 'First Notice Day'

The day after which an investor who has purchased a futures contract may be required to take physical delivery of the contract's underlying commodity. First notice day varies by contract; it also depends on exchange rules. If the first business day of the delivery month was Monday, Oct. 1, first notice day would typically fall one to three business days prior, so it could be Wednesday, Sept. 26, Thursday, Sept.27, or Friday, Sept. 28. Most investors close out their positions before first notice day because they don't want to own physical commodities.

INVESTOPEDIA EXPLAINS 'First Notice Day'

The two other key dates in a futures contract are last notice day, the last day the seller can deliver commodities to the buyer, and last trading day, the day after which commodities must be delivered for any futures contracts that remain open. A common way of closing a futures position and avoiding physical delivery is to execute a roll forward to extend the contract's maturity. Brokerage firms that allow futures trading with margin accounts may require investors to substantially increase the funds in their margin accounts after first notice day, to ensure they can pay for a delivered commodity.

RELATED TERMS
  1. Clearing House

    An agency or separate corporation of a futures exchange responsible ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  3. Approved Delivery Facility

    A facility authorized by an exchange to be used as a location ...
  4. Futures

    A financial contract obligating the buyer to purchase an asset ...
  5. Delivery

    The action by which an underlying commodity, security, cash value, ...
  6. Roll Forward

    To extend the expiration or maturity of an option or futures ...
Related Articles
  1. Introduction To Single Stock Futures
    Options & Futures

    Introduction To Single Stock Futures

  2. Grow Your Finances In The Grain Markets
    Active Trading

    Grow Your Finances In The Grain Markets

  3. Commodities: The Portfolio Hedge
    Active Trading

    Commodities: The Portfolio Hedge

  4. Intro To Open Interest In The Futures ...
    Options & Futures

    Intro To Open Interest In The Futures ...

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center