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Futures Dictionary Series: Back Months

We are sure many of you are familiar with the term spot month but have you heard of the term back month? We are going to discuss the term back month in the fifth installment of our Futures Dictionary Series today.

Back Months

According to Investopedia, back months are the available futures contracts for a particular commodity that possess expirations or delivery dates furthest into the future. Basically, back months are futures delivery months that fall beyond the spot month or front month. They are also known as deferred months.

Back months are the opposite of front month, which is the futures contract that will expire next. Usually front months are the most actively traded futures contracts.

Back Months

Let’s take wheat futures for example. The contract months of which wheat futures are traded are March, May, July, September and December. Since today is July 4, 2012, the July 2012 contract would be the front month, as it is the closest contract month that has not yet expired. The September 2012 and December 2012 futures contracts would be the back months.

See you next week with another futures trading term. Until then, happy trading!

Read more of our past Futures Dictionary Series:

1. Futures Dictionary Series: Approved Delivery Facility
2. Futures Dictionary Series: Capital Market Services Representatives (CMSR)
3. Futures Dictionary Series: Actuals
4. Futures Dictionary Series: At The Market

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