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Definition: Contract Month
Contract month refers to the month in which a future contract expires. The contract can be closed in the current month provided the terms and conditions of the contract are met. In order to settle the contract the terms and conditions of the contract should be met or the expiry date of the contract, should take place, and whichever takes place earlier will close the contract. It is also known as delivery month.
Future contracts and option contract are similar in respect that they are valid till a specified time frame. The month in which the future contract conditions are met or the future contract expires is known as contract month as this is the month when the future contract becomes applicable.
Let’s say you have a future contract that expires on 31st December 2014, and then December is the contract month. Let’s say in the same case if all the terms and conditions of the future contract is met in the month of September, then September is the contract month.