Back Months

Back months — also referred to as far months or deferred months — are the futures or options contract expiry months that are further out in time relative to the nearest expiry, which is called the front month or near month. In a typical futures market, contracts are available for multiple expiry months simultaneously — for example, in Indian equity derivatives, NSE offers monthly contracts for the current, next, and far months. Back month contracts generally have lower trading volumes and open interest compared to the front month, but are used by traders and hedgers with longer time horizons who need price protection or speculative exposure beyond the near-term contract cycle. Back month contracts typically trade at a premium (contango) or discount (backwardation) to spot prices depending on the cost of carry, dividends, and market sentiment. For sophisticated derivatives traders on Ventura Securities, understanding the price dynamics and liquidity characteristics of back months is essential for calendar spread strategies, long-dated hedging programs, and roll-over management as front month contracts approach expiry.