Front Month


DEFINITION of 'Front Month'

Used in futures trading to refer to the contract month with an expiration date closest to the current date, which is often in the same month. In other words, this would be the shortest duration contract that could be purchased in the futures market. Contracts that are a month or more behind the front month contracts are referred to as back month contracts.


Front month contracts are generally the most liquid of futures contracts, in addition to having the smallest spread between the futures price and the spot price on the underlying commodity. Use of front month contracts requires an increased level of care, since the delivery date may lapse shortly after purchase, requiring the buyer or seller to actually receive or deliver the contracted commodity. Front month contracts are often paired with back month contracts to create calendar spreads.

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  3. Delivery Date

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    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  3. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
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