What It Means
Near-month, mid-month, and far-month are the three contract expiries an exchange keeps open for trading on a given F&O underlying at the same time. Near-month is the one expiring soonest, mid-month is the one after that, and far-month is the one furthest out.
How It Works
NSE and BSE typically list three monthly F&O contracts at once for an underlying, so a trader can choose which expiry to trade rather than only the nearest one. As the near-month contract expires, the mid-month contract becomes the new near-month, and a fresh far-month contract gets added, keeping three live at any time.
Liquidity is heavily concentrated in the near-month contract, since that's where most trading activity happens. Mid-month and far-month contracts trade too, but usually with wider bid-ask spreads and lower volume.
Example
In September, NIFTY futures would have the September contract as near-month, October as mid-month, and November as far-month, all tradable at the same time on the same exchange.
Warning
Assuming a far-month contract is just as easy to trade as the near-month one. Wider spreads and thinner volume on far-month contracts mean orders can fill at worse prices than expected.
Related Terms
- Options Expiry: the date each of these contracts stops trading and settles
- Rollover: moving a position from the near-month contract into the next one as expiry approaches
- F&O (Futures & Options): the contract types that follow this near/mid/far listing convention