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Current Delivery

Reviewed by Athena | Updated on Oct 05, 2020

Catalogue

Introduction

Current delivery refers to when a futures contract requires delivery of the underlying commodity to take place in the current month. In some cases, it could be delivered in the subsequent month; however, it should be the earliest possible delivery, before other future contracts with other delivery dates, traded in the same commodity, are due.

Understanding a Futures Contract

A futures contract is an agreement between two parties to buy or sell something on a specified date in the future, and for a predetermined price. The transaction could be in a commodity or a financial instrument.

The price at which the seller delivers the underlying asset, currency, or financial derivative to the buyer is called the forward price. The specified date depends on the parties involved in the transaction. It could vary depending on the delivery period, being an entire month for some futures, or a fixed date for others.

Current delivery is a type of futures contract, which is defined by the month in which it is delivered, i.e. the current month in which it is transacted. Some futures contracts require the physical delivery of assets, while others are settled with cash.

Example of a Current Delivery Being Structured

Here is an example of how a current delivery contract is structured- "Trading shall cease in the current delivery month, on the fifth day prior to the twentieth day of the month which precedes the delivery month.

If the twentieth day of the month is not a business day, then trading shall cease on the fifth business day which is prior to the last business day, which precedes the twentieth day of the month. In the event that the original expiration day is declared a holiday, expiration will move to the business day immediately prior to it."

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