AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- The nearby futures contract has the earliest settlement date among available contracts.
- The "next out" contract follows the nearby contract in the delivery timeline.
- The most distant futures contract is furthest away in terms of settlement.
In the realm of futures trading, contracts are typically available with multiple settlement dates, allowing traders to choose instruments that align with their strategies and time horizons. Among these contracts, the one with the closest expiration or delivery date is known as the nearby futures contract. This contract is particularly important for traders who are focused on short-term positions or looking to capitalize on immediate market movements.
Just after the nearby contract is what traders refer to as the “next out” or next futures contract. This is the contract that expires immediately after the nearby one and is often used to assess near-term market expectations or to roll over positions when the nearby contract is nearing expiration. On the other end of the timeline lies the most distant futures contract, which has the latest delivery or settlement date. This contract appeals to long-term speculators and hedgers with extended investment horizons.
The classification into nearby, next out, and distant contracts helps traders better interpret price curves, manage risk, and implement hedging strategies more effectively. Since futures markets often display varying prices across different expiration months—known as the futures curve—these distinctions provide insight into whether the market is in contango (prices rising with time) or backwardation (prices declining with time).
In conclusion, the nearby futures contract serves as a vital reference point in futures trading, especially for short-term decision-making. Understanding the structure of settlement timelines—nearby, next, and distant—enables traders to navigate the futures market with greater clarity and strategic advantage.
