Expiration — The date a futures contract stops trading and is settled, either financially or by delivery.
How expiration works in prop trading
Every contract has a final trading day set by the exchange. Equity index futures expire quarterly on the third Friday of March, June, September and December; energy and agricultural products expire monthly on their own schedules. After expiry the contract ceases to exist and settles at a defined final price.
Retail traders and prop accounts never reach settlement. Firms flatten or restrict expiring contracts in advance, and physically deliverable products — crude oil most notably — carry a first notice day earlier than expiry that platforms enforce independently. The practical rule for a prop trader is to be out of the expiring month once liquidity has moved on.
Key points
- Equity index futures expire quarterly on the third Friday; other products vary.
- Physically deliverable contracts have a first notice day before expiry that matters more in practice.
- Prop firms flatten or restrict expiring contracts ahead of the date.
- Liquidity leaves the expiring month before expiry, so trading it late is costly regardless of the rules.
Also known as
- expiry
- last trading day
- contract expiration
Frequently asked questions
What happens when a futures contract expires?
It stops trading and settles at a defined final price — in cash for financially settled products, or by delivery for physical ones. Retail and prop accounts are closed out or rolled well before that point.
Do I need to close my position before expiry?
Yes, and in practice well before. Prop firms restrict or auto-flatten expiring contracts, and liquidity has usually moved to the next month days earlier, so holding the expiring contract means poor fills even if the rules allow it.
Expiration is described here as a plain-language educational definition. Firms, platforms, and account programs may apply different conditions or calculations. Verify the current official terms before using this definition to make an account decision.