Contract Maturity

Contract maturity is the specific date and time when a derivative contract expires and the final settlement occurs. At this point, the obligations of the contract are fulfilled, and the contract ceases to exist.

Different derivatives have different maturity profiles, ranging from short-term daily contracts to long-term monthly or quarterly ones. The proximity to maturity is a key driver of trader behavior, as it dictates how much time remains for the position to become profitable.

As maturity approaches, the time value of options decays, and the price of the derivative converges toward the spot price of the underlying asset. Understanding maturity structures is essential for building effective trading strategies.