Education Series

Education Series on Derivative Contracts

Maturity Period:

In the derivative segment of the Indian equity market, contracts are available with three maturity periods at any point of time namely near month contracts, next month contracts and far month contracts. Contracts expiring during the ongoing month are called near month contracts and the other two refer to contracts having maturity dates during the subsequent months. For example, near month contracts for December are all contracts that mature on or before the last day of December while next month and far month contracts are those with maturity dates in January and February.

Normally, the duration of a contract is from the beginning of a month and expires on the last Thursday of that month. In case the last Thursday is a holiday, the working day prior to that will be treated as the expiry or settlement day.

As the contracts for a month expires on the last date decided as above, contracts for the third subsequent month would have opened automatically on the very next day so as ensure contracts having three maturity periods. For example, contracts for December expires on the last day of that month and March contracts will be opened on the next working day making the number of contracts into three (January, February and March) on maturity basis.