Why Do Traditional Futures Contracts Have an Expiration Date? ⎊ Path

Why Do Traditional Futures Contracts Have an Expiration Date?

Traditional futures contracts have an expiration date because they were originally designed for producers and consumers to hedge against price risk or to facilitate the physical delivery of a commodity. The expiration date formalizes the end of the contract's life and sets the final settlement point, ensuring the transfer of the underlying asset or the final cash payment occurs on a specific day.

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Expiration Date

Settlement ⎊ An expiration date within cryptocurrency derivatives signifies the final date on which a contract’s underlying asset can be settled, impacting pricing models and risk exposure.