how futures trading works
futures contracts are standardized by quantity quality and asset delivery making trading them on futures exchanges possible they bind the buyer to purchasing and the other party to selling a stock or shares in an index at a previously fixed date and price 5 this ensures market transparency enhances liquidity and aids in accurate prices stock futures have specific expiration dates and are organized by month for example futures for a major index like the s p 500 might have contracts expiring in march june september and december 6 the contract with the nearest expiration date is known as the front month contract which often has the most trading activity as a contract nears expiration traders who want to maintain a position typically roll over to the next available contract month short term traders often work with front month contracts while long term investors might look further out 1