What is the front month?

and Front Month is a term used in futures trading, and refers to the moon in the futures contract that is closest to the current date. This means that the front month is the shortest time frame where the contract can be purchased. If the current date and expiration date are not included in the same calendar month, the contract is usually referred to as a reverse contract rather than a contract for the front month.

In most situations, the contract with the front month is considered to be somewhat more liquid than other types of futures contracts. Some of this is caused by a relatively small gap that exists between the discovery price of the commodity or commodity that underlines the contract and the Futures price. Although this means a short duration of the contract itself, it also means that it is necessary to assess the potential of the contract very narrowly, with special attention to market movements and other events, which are likely to be affected by the investment in the next few weeks.

The brief duration of the front month's access has led to the fact that this type of investment strategy is sometimes known as the Moon Agreement in nearby delivery. As the name suggests, the contract is a short -term arrangement that is likely to be resolved in short order. In some circles, the front month is also known as a spot month, because of a small gap that separates the point price and futures the price associated with the agreement.

One example of a situation where a contract for the front month is likely to be used is futures on corn. Usually, the expiration of these types of contracts usually occur in the last month of each quarter of any of the calendar year. This means that if the messages published in May may indicate that corn is down, they refer to the expected price that will be introduced in June. Investorths can decide to assume that the price will not fall temporarily but in fact will increaseUntil the futures contract actually sells at the end of the quarter and purchases the commodity now rather than later. If the price of corn should increase until the contract is expired, the investor is to gain return without committing his resources for a long time. As with any investment, there is a chance that something would cause corn price, which would result in the loss of the Futures contract.