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What happens when a contract ends? Like i see contracts on say natural gas that ends on January 2018 then February 2018 and so on, does like when the January contract ends, it just transfer to February now? Or does that future go away and cant be traded anymore?
THanks!
Can you help answer these questions from other members on NexusFi?
If you wanna roll (Natural Gas futures) you must sell contact at the latest in Last Trading Day. January 2018 has lLast trading day (27 Dec 2017) and buy February 2018.
If you hold January 2018 contract after Last trading day the underlying asset (Natural Gas) will be delivered to you. Henry Hub Natural Gas Futures Contract Specs - CME Group
Lokk in contract spec. that natural gas has Settlemend Method (Deliverable)
Settlement can be physical or in cash. You need to read the contract specifications to know how the settlement happens at the expiry and when exactly is the expiry.
@Obelixtrader gave you a correct answer for NG
for example on BTC (XBT future) the settlement would be in Cash and not in bitcoins
Check with your broker as to when you need to be out of each month's contract - either by rolling or closing.
Otherwise, as someone else said, prepare for delivery! Just kidding!
Unless you're in business of buying/selling actual commodities, I'm sure your broker will make it clear that they don't allow customers to take delivery.
For instance, TD Ameritrade's software, Thinkorswim, tells how many days until expiration, and a call to them will tell you when on those days you have to be out of the futures options and the futures themselves. In what I have traded (gold, crude oil, eurodollar) those two dates are never the same.
Just kidding!