Investors can trade a continuous futures contract, also known as lead futures (LED), on the Hong Kong or US stock markets.
A continuous futures contract is a way for traders to maintain a position in a specific market without having to roll over to a new futures contract at every expiration date.
The general rules for selecting continuous futures contracts are as follows:
1. Each futures product has only one lead contract.
2. The last trading day of the lead contract must be after the current date. If a futures contract's last trading day falls on the current date, it is generally not selected as the lead contract.
3. A futures contract with the highest daily trading volume and open interest will be the new lead contract on the next trading day.
4. If the current lead contract is not the one with the highest trading volume and open interest, it will relinquish its status as the lead contract to the one with the highest volume.
Continuous futures contracts also have specific rules by market outlined below.
For HK stock futures, a futures contract can't be selected as the lead contract from the second trading day before the last trading day.
In the US market, stock index futures and crude oil futures have their own rules. All other stock futures use the same rules as outlined below.
For the following index futures products: YM, VX, RTY, NQ, NKD, NIY, MYM, MNQ, MES, M2K, ES, EMD
• A futures contract can't be selected as the lead contract from the fourth trading day before the last trading day.
For example, if YM2012 expires this Friday, the lead contract will switch to YM2103 during the Monday trading day, specifically during the Sunday night trading session.
For crude oil futures (CL):
• A futures contract can't be selected as a lead contract from the fourth trading day before the last trading day.
For all other US stock futures:
• For physical delivery products, if the first notice day of the contract is earlier than the last trading day, from the second trading day before the first notice day, it can't be selected as the main contract.
• A futures contract can't be considered the lead contract from the second trading day before the last trading day.
For example, if XX2012 expires on November 20 (Friday), the new lead contract will be XX2101 when the market opens on November 18.