Futures expiration and contract roll explained

Our summary

Futures contracts expire, and this CME Group video explains what traders do about it.

• Expiration date: the last day a contract can be traded. The video notes it can fall on the third Friday of the expiration month, but it varies by contract.
• Three choices before expiry: offset the position (make an equal and opposite trade), roll it to a later contract month, or let it expire and take or make delivery.
• Offsetting is the simplest and most common exit: a trader short two September WTI contracts buys two September WTI contracts, and the price difference is the profit or loss.
• Rolling means closing the front-month contract and opening the same position in a later month at the same time. Traders watch volume in both months to decide when; liquidity can thin out near expiration.

Our take: swing traders and anyone holding futures for more than a few days need a plan for the roll. Check each contract's specifications on the exchange website rather than assuming a date.