Nearby Month


DEFINITION of 'Nearby Month'

In the context of options and futures, the month closest to delivery (futures) or expiration (options). "Nearby month" is sometimes referred to as "nearest month," "front month" or "spot month." A contract for the nearby month is the shortest contract that an investor can purchase. Trading is usually most active for the nearby month as compared to deferred months.

BREAKING DOWN 'Nearby Month'

In a normal futures market that is in contango, nearby months are less expensive than deferred months. In backwardation, futures market conditions are such that the nearby month is more expensive than deferred months. The nearby month is a key component of many options and futures trading strategies, including the calendar spread and reverse calendar spread. These strategies seek to profit from differences in pricing between the nearby month and a more distant month for the same underlying market.

  1. Contango

    A situation where the futures price of a commodity is above the ...
  2. Backwardation

    A theory developed in respect to the price of a futures contract ...
  3. Delivery Month

    A key characteristic of a futures contract that designates when ...
  4. Futures

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

    One of the three regular option cycles; represents the months ...
  6. Expiration Date (Derivatives)

    The last day that an options or futures contract is valid. When ...
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