Front month
Definition · Level 7 · Futures & commodities
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The nearest-expiring futures contract that is actively traded: usually the most liquid, and the one a screen means by “crude” or “ES”. Charted as CL1; the next expiry is CL2, and so on.
Example
When the front month expires, the old CL2 becomes the new CL1.
Where Tradecraft teaches it
Level 7 · Futures & commodities, in the lesson “The futures curve: contango & backwardation”: The front month and the roll, contango against backwardation, spot, basis and convergence, and what a roll costs.
Related terms
- BackwardationCurve shape where later-dated futures trade below nearer ones.
- BasisThe gap between the spot (cash) price and a futures price, usually spot − futures.
- ContangoCurve shape where later-dated futures trade above nearer ones (and above spot), typically reflecting carrying costs such as financing and storage.
- Futures curveA commodity’s futures prices lined up by expiry, from the nearest to the furthest.
- Futures rollClosing an expiring futures position and opening the same position in a later expiry, usually as one calendar-spread trade, to keep exposure past…
- Roll yieldThe gain or loss from rolling a futures position when the curve is not flat: negative in contango (you buy the dearer later contract), positive in…