Education Series on Derivative Contracts
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.