Futures trading involves the buying and selling of contracts that have a specified expiration date. Each market and product has its own specific expiration schedule throughout the year. Based on the schedule of the product, the volume and open interest for each contract will fluctuate over time. Purdia Capital requires all traders to always trade the 'current' contract, which effectively means the contract with the most volume. To learn more about futures contract expiration dates and identifying the current contract, continue reading below.
Futures Contract Expirations Dates
Each futures contract is identified by a product symbol followed by an expiration month and year. Each month of the year has a corresponding letter code, and the year is generally represented by a single digit. For example, "ESU4" is the symbol for the E-Mini S&P 500 ("ES") futures contract expiring in September ("U") of 2024 ("4"). Equity index futures products like ES and NQ operate on a quarterly schedule, with expiration dates on the third Friday of every third month: March ("H"), June ("M"), September ("U"), and December ("Z"). Other products, such as gold (GC) and oil (CL), have expiration dates each month.
Identifying the Current Contract
It is the responsibility of every trader to correctly identify and trade the current, "front-month" contract (i.e., the contract with the most volume). Your trading platform may alert you when you open a chart with a contract that is not current, and the CME Group website has many resources available for determining which contract is current for every futures product. Click on the link above and type in the symbol of the product you want information on. After clicking on the product, you will be taken to a page with all relevant information for that product. You can see the current contract, and you can click on the 'Volume & OI" tab to see volume and open interest data on each contract for that product.
In the example below, you can see the status of the ES as of the third week of August, 2024. The September 2024 contract is highlighted, along with the Volume and Open Interest columns. You can see the volume and open interest on the December 2024 contract is much lower, and this will increase as the September expiration date gets closer.
Contract Roll
As a contract's expiration date approaches, volume and open interest will start to shift away from the expiring contract and towards the next contract on the calendar. Once the next contract's volume & open interest surpass that of the expiring contract, traders should immediately switch to trading the next contract. Continuing to trade the expiring contract as volume drains away can result in bad fills and significant slippage. In most cases, this means that you will need to update the symbol in all of your charts to the current contract. Make sure that you have updated the contract everywhere, especially where ever you place your trades!
Important Note: With TradingView, frequently your trading chart will be for the continuous contract, represented by a "!" after the product symbol (for example, "ES!"). In this case, your orders will automatically apply to the most current contract, and you don't need to worry about updating your charts.
