Contract Expiry

Contract expiry is the specific date and time when a derivative contract ceases to exist and is settled. At this point, the contract is either settled in cash or by the delivery of the underlying asset.

Expiry is a major event in derivative markets, often leading to increased volatility as traders roll over their positions or close them out. In the cryptocurrency space, quarterly futures contracts are a common example where market participants must decide whether to extend their exposure or take profits.

Understanding the expiry cycle is essential for managing a portfolio, as it introduces a fixed timeline for investment decisions. It also creates opportunities for arbitrage between different contract maturities.

Traders must be aware of the impact that expiry can have on price, as the closing of large positions can create significant market movement. It is a critical component of the structural design of financial derivatives and a key date for all market participants.