The futures contract with the closest expiration date currently available for trading. It is typically the most actively traded and liquid contract in a market.
Why It Matters
- 1Front month contracts are often preferred by traders due to higher liquidity, tighter spreads, and better execution.
- 2They are also the contracts most affected by near-term market events.
Example
- 1In March, the March crude oil futures contract is the front month.
- 2Traders looking for the most active trading opportunities will typically focus on this contract.
Common Mistakes
- ✖Ignoring front month rollover dates
- ✖Confusing front month with next-month contracts
- ✖Assuming front month is always the cheapest or most profitable
- ✖Not accounting for increased volatility as expiration approaches