Futures expiration and contract roll

Unlike stocks, futures contracts have a limited lifespan (an expiration date) that will influence the trading of the products.

A contract’s expiration date is the last day a trader is able to trade the product. Typical expiration for futures contracts is the third Friday of the expiration month but varies by product, so make sure to review the contract specifications.

Each contract is subject to a different expiration cycle, so please refer to the contract specifications for the specific contract expirations.

Contracts are listed by contract code, expiration month, and expiration year. For example, MESH4 is broken into 3 components:

1. The contract – MES (micro e-mini S&P 500)
2. The expiration month – H (March – see full list of contract month codes below)
3. The expiration year – 4 (2024, with the full year truncated down to the last digit of the expiration year)

Contract product codes can vary by platform, but contract month codes are generally universal.

As expiration nears, a trader has three choices if they are carrying a futures position:

• Offset the position – liquidate or offset the position by buying (if short), or selling (if long) an equal number of contracts in the contract month of the position held.
• Rollover – liquidate the position in the current month and establish a new position in the next contract month.
• Settlement – for cash-settled futures, the exchange (and broker) will debit or credit the trader’s trading account the amount of cash the contract they held settled into or out of the money. If the contract is physically settled, the trader will have to make arrangements to make or take delivery of the underlying. Generally speaking, brokers do not allow retail trading accounts to enter into deliverable positions as expiration dates get closer.

For example, in a cash-settled contract, if the trader has a position of long one MESM3 at 4447 and the contract on the expiration date settles at 4446, the trader will be debited $5.

Contract Month Codes