Business, Legal & Accounting Glossary
The specified month within which a futures contract matures and is settled by delivery of the underlying asset is referred to as the delivery month. Every futures contract has a specified delivery month. For example, delivery month dates for wheat contracts are in March, May, July, September and December. Delivery may occur anytime during the delivery month; however, exchanges typically require two days notice prior to delivery. Most futures traders avoid taking delivery by closing out positions before the delivery month begins. Delivery of commodity contracts during the delivery month generally means the investor receives a warehouse receipt (rather than the physical asset). Financial futures are generally cash-settled. Open positions at contract expiration during the delivery month are closed at a settlement price.
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This glossary post was last updated: 7th February, 2020 | 7 Views.