First Notice Day


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.

BREAKING DOWN '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.

  1. Roll Forward

    To extend the expiration or maturity of an option or futures ...
  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. Spot Delivery Month

    The nearest month when a futures contract matures. The spot delivery ...
  5. Futures

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

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