Expiry vs perpetual — futures expire
Explain why futures contracts have expiration dates and how that differs from spot or crypto perpetuals.
Lesson path
Futures, Indices, and Commodities
Futures Basics
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Explain why futures contracts have expiration dates and how that differs from spot or crypto perpetuals.
The clock that doesn't exist in spot
If you're coming to futures from spot stocks or crypto perpetuals, this is the biggest mental shift: every futures contract has an expiration date. Stocks can be held forever. Crypto perpetuals never expire by design. Futures contracts have a hard cutoff. After it, the contract literally stops existing.
Expiration dates aren't random — they follow a published cycle that depends on the asset class. Equity index futures (ES, NQ, RTY) use a quarterly cycle: March, June, September, December. The contract month is part of the ticker symbol — ESH26 is March 2026, ESM26 is June 2026, ESU26 is September, ESZ26 is December. (H, M, U, Z are the standard month codes — the third Friday of that month is typically the last trading day.) Energy and metals are more granular — crude oil has a contract for every month. Treasury bonds also run quarterly. Each contract has a specified 'last trading day' on the CME spec sheet.
Why expiration matters in practice: you cannot hold a futures position through expiration the way you can hold a stock through earnings. You either close before, settle at expiration (cash or physical, depending on the contract — covered in the next lesson), or 'roll' to the next contract month. Letting an index future expire while you're long means your position gets cash-settled at the final settlement price. Letting a physical commodity future expire could, in theory, mean a barrel of oil shows up. (It won't — your broker will force-close you days before that becomes a real risk. But the threat is what shapes the rules.)
Reading the ticker: 'ESH26' decodes as ES (E-mini S&P) + H (March) + 26 (year 2026). When traders say 'the front month,' they mean the contract closest to expiration that's actively trading. As it approaches expiry, volume migrates to the next month — and that migration is what we'll cover when we get to the roll period in lesson six.
Recap: futures expire on a published schedule. Equity index contracts are quarterly (Mar/Jun/Sep/Dec). The ticker tells you the month and year. You close before expiration, settle, or roll.
Knowledge check
Answer before moving on.
1. What does 'ESM26' represent?
2. How is a futures contract different from a crypto perpetual?
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