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Front Month

What does Front Month mean?

In futures markets, for any commodity, different contracts are available that would expire in different months. The month which has the earliest expiry date of the contract is known as the ‘Front Month’ and the month containing the contract to expire last is known as ‘Back Months’.

Futures Knowledge Explains Front Month

In futures markets, front month is the month with nearest expiration date. Suppose in June, futures for Natural Gas are available with expiry in July, August and September.  The July contract is front month contract and September contract is the back months contract, because out of all the available contracts, July contract expires first and September contract expires last. The difference in price between the front month futures contract and the back month futures contract is used to calculate the calendar spread.

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