Front Month

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Dictionary Says

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.
Investopedia Says

Investopedia explains 'Front Month'

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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'Front Month'

  • Option Spreads: Horizontal Spreads | Investopedia

    http://www.investopedia.com/university/optionspreadstrategies/optionspreads5.asp
    ... Credit Spreads, Sell out of the money (OTM), buy further out of the money (FOTM),
    Buy front month ATM, sell back month ATM, Buy/sell front month, sell/buy back ...

  • Stock Option Expiration Cycles

    http://www.investopedia.com/articles/optioninvestor/03/090303.asp
    ... For the regular options, July, September and December were already trading, so
    all they needed to do was add the second front month: August. ...

  • Playing The Oil Rally With Funds

    http://stocks.investopedia.com/stock-analysis/2010/Playing-The-Oil-Rally-With-Funds-USO-USL-DBO-OIL1210.aspx
    ... forwards. USO could run into issues with contango when the fund must sell
    their front month contracts and buy the next month. If ...

  • Option Spreads: Diagonal Spreads | Investopedia

    http://www.investopedia.com/university/optionspreadstrategies/optionspreads6.asp
    ... strike. That's it! It's easy. Diagonal simply refers to choosing a back-month
    leg that is not the same as the front-month leg. Figure ...

  • Oil Gas Ratio At Extreme Levels

    http://stocks.investopedia.com/stock-analysis/2009/Oil-Gas-Ratio-At-Extreme-Levels-USO-UNG-FCG-CHK-GDP-WLL-DNR0618.aspx
    ... gas moving higher by buying the United States Natural Gas ETF (NYSE:UNG), which
    tracks the price of natural gas by purchasing the front month NYMEX futures ...

  • Call Buyers Dig This Mining Stock

    http://stocks.investopedia.com/stock-analysis/moneyshow/CallBuyersDigThisMiningStock.aspx
    ... By buying these calls to open, speculators are expecting CDE to climb north
    of the $31 level by the time front-month options expire. ...

  • Options On Futures: A World Of Potential Profit

    http://www.investopedia.com/articles/optioninvestor/02/061302.asp
    ... The active month is known as the "front-month contract", and it is the first of
    the three delivery months listed in Figure 2. The last trading day for all S&P ...

  • Options Greeks: Introduction | Investopedia

    http://www.investopedia.com/university/option-greeks/
    ... If you sell an at-the-money front month option and buy an at-the-money back month
    option (standard calendar spread), the Vega values on these options will net ...

  • Get Ready For Higher Prices At The Pump

    http://stocks.investopedia.com/stock-analysis/2012/Get-Ready-For-Higher-Prices-At-The-Pump-ENB-UGA-DBO-OIH0103.aspx
    ... While the fund has suffered from contango, a condition where the next month's contract
    is more expensive than the front month, making it economically viable ...

  • Options Greeks: Introduction | Investopedia

    http://www.investopedia.com/university/option-greeks/default.asp
    ... If you sell an at-the-money front month option and buy an at-the-money back month
    option (standard calendar spread), the Vega values on these options will net ...

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