What is the delivery month?

Delivery month is the month in which the futures contract will be completed. In some cases, this will mean physical delivery of goods. In others, it will be a point at which the cash calculation is calculated and completed. This is contrary to the simpler system where the agreement is finished immediately, known on the spot, because the agreement takes place on the spot. Usually with a futures contract, the price is agreed in advance and will apply no matter what the prevailing market price is when the agreement is over.

with some types of futures contracts will literally include delivery month. For example, with a commodity agreement, the seller will provide an agreed amount of commodity in the agreed month, such as grain while the buyer hand over the money. The contract may include delivery that is actual but you will find electronic form. For example, with a currency futures contract, these two sets of money are usually supplied by an electronic transfer rather than a physical cash.

For other types of futures contracts, the month of delivery simply includes a calculation. This comes with shops that use a nominal amount. For example, some trades may include both parties that borrow a specified amount, one charges the agreed fixed rate and the other charging of the market rate in the month of delivery. With these stores, the loan capital will never change their hands and the months of delivery will come, both parties do not pay full interest payments. Instead, they calculate how much interest payments from both sides would be, and then one side pays the other to create a difference, which represents profit and loss of agreement.

Exactly when the agreement is completed in the delivery month, depends on the individual contract. On many financial stock exchanges there is a standardized date for delivery on a specific type of contract in each month. If this is the case, both parties must be agreed in advance any variability.

Some contracts may be labeled as contracts on the front month. This means that daTum completion is first possible date after agreement agreement. It will either be the same month of the calendar, or the following calendar month, depending on whether the standard completion date has already passed in the current calendar month. Although potential profit tends to decline as the completion date is close, because it is less likely that the market rate changes will be unpredictable, trading contracts in the first month may be particularly liquid. This is because many traders are only interested in achieving profits by purchasing and selling futures contracts and do not want to engage in exchange at the end, especially with physical commodities.