Last Trading Day

AAA

DEFINITION of 'Last Trading Day'

The final day that a futures contract may trade or be closed out before delivery of the underlying asset or cash settlement must occur. By the end of the last trading day, the contract holder must be prepared to accept delivery of the commodity, or settle in cash if the position is not closed.

INVESTOPEDIA EXPLAINS 'Last Trading Day'

The holder of a futures contract is obligated to fulfill the terms of the contract, however, in most cases, delivery of the asset underlying the futures contract does not occur, as most investors use futures as a method to hedge or speculate on the underlying asset's price.

RELATED TERMS
  1. Cash Settlement

    A settlement method used in certain future and option contracts ...
  2. Current Delivery

    A type of futures contract that requires the delivery of the ...
  3. Futures

    A financial contract obligating the buyer to purchase an asset ...
  4. Underlying

    1. In derivatives, the security that must be delivered when a ...
  5. Option

    A financial derivative that represents a contract sold by one ...
  6. Delivery Month

    A key characteristic of a futures contract that designates when ...
Related Articles
  1. Options Basics Tutorial
    Options & Futures

    Options Basics Tutorial

  2. Options On Futures: A World Of Potential ...
    Options & Futures

    Options On Futures: A World Of Potential ...

  3. Futures Fundamentals
    Insurance

    Futures Fundamentals

  4. Stock Safety: Top 3 Ways to Limit Your ...
    Options & Futures

    Stock Safety: Top 3 Ways to Limit Your ...

Hot Definitions
  1. Debit Spread

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

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

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center