What happens when a futures contract expires?

When a crypto futures contract expires, traders must either settle in cash or deliver the actual asset—failing to act can trigger automatic exchange execution, impacting margin and P&L.

Jul 23, 2025 at 09:21 pm

Understanding Futures Contract Expiration

When a futures contract expires, it means the contract has reached its predetermined end date and can no longer be traded. At this point, the obligations outlined in the contract must be fulfilled. For cryptocurrency futures, this typically involves either physical delivery of the underlying asset or cash settlement, depending on how the exchange structures the contract. Traders holding positions at expiry must be aware of their obligations—whether they are long (buying) or short (selling)—as failure to act may result in automatic execution by the exchange.

Difference Between Cash-Settled and Physically Delivered Contracts

Cryptocurrency futures contracts fall into two main categories:

• Cash-settled contracts close out based on the final settlement price, and profits or losses are credited or debited in stablecoin or fiat. No actual crypto changes hands.
• Physically delivered contracts require the transfer of the actual cryptocurrency from the seller to the buyer at expiry.
  

  For example, if you hold a physically delivered BTC/USD futures contract at expiry, you must either deliver BTC if short or receive BTC if long. Exchanges like Binance and Bybit offer both types, so always check the contract specifications before trading. Misunderstanding this distinction can lead to unintended asset transfers or margin calls.

  What Happens If You Don’t Close Your Position Before Expiry?

  
  If you leave a futures position open past the expiry date:
• The exchange will automatically close the position at the final settlement price for cash-settled contracts.
• For physically delivered contracts, the exchange will execute the delivery process, moving assets in or out of your wallet.
• If your account lacks sufficient margin, you may face forced liquidation or negative balance adjustments.
  

  This automatic handling removes the need for manual action but can catch unprepared traders off guard. Always review your open positions and expiry dates in the futures trading interface—most platforms display this clearly under the “Positions” tab.

  Step-by-Step: How to Avoid Unwanted Outcomes at Expiry

  
  To prevent surprises when a futures contract expires:
• Check your open positions daily in the futures dashboard. Look for contracts nearing expiry (usually marked with a date).
• Decide whether to roll, close, or hold. Rolling means closing the expiring contract and opening a new one with a later expiry.
• Manually close the position by placing a market or limit order that offsets your current position (e.g., sell if long, buy if short).
• Verify your wallet balance if holding a physically delivered contract—ensure you have enough funds or crypto to meet delivery obligations.
• Set calendar reminders for expiry dates to avoid last-minute stress.
  

  Most exchanges provide a “Close Position” button—clicking it executes the trade instantly. Confirm the transaction in your trade history to ensure it’s processed.

  Impact on Margin and P&L at Expiry

  
  At expiry, unrealized P&L becomes realized instantly. If your position was in profit, the gain is added to your margin balance. If it was in loss, the amount is deducted. This can affect:
• Available margin for other trades—a large loss might reduce your capacity to open new positions.
• Maintenance margin requirements—if the deduction pushes your equity below the maintenance level, you risk liquidation.
• Funding fees—these stop accruing once the contract expires, so no further debits or credits apply.
  

  Always monitor your total equity and margin ratio in real time using the exchange’s risk management tools. Some platforms show a “Settlement Preview” before expiry to estimate final P&L.

  Frequently Asked Questions

  Q: Can I still trade a futures contract on its expiry day?
  
  Yes, you can trade until the official expiry time (usually 08:00 UTC on the expiry date for most exchanges). After that, the market closes, and no further trades are allowed.

  Q: What time exactly does a futures contract expire?
  
  Most crypto futures expire at 08:00 UTC on the specified date. Check the contract details page on your exchange—this is non-negotiable and applies globally regardless of your local time zone.

  Q: Do I get charged fees when a contract expires automatically?
  
  No automatic expiry itself doesn’t incur extra fees. However, if the exchange closes your position via market order due to insufficient margin, standard taker fees apply based on your fee tier.

  Q: Will my open orders be canceled when a contract expires?
  
  Yes, any open limit or stop orders tied to the expiring contract are automatically canceled at expiry. You must re-enter them for the new contract month if you wish to continue trading.