Futures Contract Duration
Do futures contracts have a lifespan?
Futures Contracts expire on the 3rd Friday every month. The contracts have relatively short life spans. For soft goods, the contract will generally expire in under a year. For currency futures contracts will generally expire in 5 years or less.
In general, futures contracts are rarely traded more than 6 months out, most actively traded a few months before expiration, and then rarely traded just before expiration. The volume is important, as low trading can lead to an illiquid market that can not accurately respond to price shifts.
Staying in a contract until expiration is usually a bad idea. Time decay and low volume erode profits.
What is triple witching, sounds evil?
It definitely is an omen of sorts. These are typically the most volatile days of the year. They occur every expiration Friday of March, June, September, and December. On those four Fridays - futures, index options, and stock options expire simultaneously. With so many issues expiring simultaneously, wild price swings are the norm. Inexperienced traders would be wise to steer clear of these trades.
Expiration symbols
Futures contracts always contain a character indicating expiration in the symbol. (Note: These symbols do not coincide with options expiration symbols). The expiration will always be the third(3rd) character in the symbol. The symbols used are:
| Month |
Symbol |
| January |
F |
| February |
G |
| March |
H |
| April |
J |
| May |
K |
| June |
M |
| July |
N |
| August |
Q |
| Septmeber |
U |
| October |
V |
| November |
X |
| December |
Z |
|
