Odd Date

What is an Odd Date?

The odd date refers to the maturity date for a futures contract that does not fall exactly on a fixed term such as three months, but instead falls a few days earlier or later. This can be agreed upon in advance or result from the timing of a holiday such that it impacts the length of the contract. Odd dates can make the pricing of contracts slightly more complicated than typical contracts. 

Understanding Odd Dates

The odd date, also known as the broken date, applies to investments such as bonds, futures contracts and options where it is agreed in advance the maturity date can be more flexible than with most other contracts. The majority of bond investments rely upon set maturity dates as part of the predictability of the investment. This predictability is important to investors looking to create balanced portfolios containing a certain number of reliable investments of various durations.

For example, a 90-day bond purchased on May 1 will mature on August 1. A contract with an odd date expiration might mature a few days before or after August 1. These odd dates can be the result of holidays falling within the contract period or due to other administrative factors. A challenge with contractual odd dates is the added administrative costs typically seen due to the non-conformity of the end date. Because they are an exception to most fixed contracts, they require more administrative attention to calculating their value. Odd date contracts can be found in the world of derivatives and foreign contracts, as well as in a variety of other futures contracts.

Other types of maturity dates include the spot date, the declaration date and the trade date. The spot date refers to the date when the transaction is settled and funds are distributed. The declaration date is the last date a holder of an option must declare whether they wish to exercise their option. The trade date is the month, day and year that a trade is made.

Paying Attention to Odd Dates

Investors need to be aware that the maturity date for an option has an odd date because this can affect the price received. It is rare but does happen that a few days difference can make a meaningful difference in the price received versus the price anticipated.

For example, within the world of foreign currency exchange, odd dates are common and currency markets have a tendency to move in step with world or national news, which may bring surprises as quickly as overnight. If an investor does not pay attention to these dates, they may be in for an unpleasant surprise if significant price moves occur around the maturity date. 

Odd dates can lead to surprises within commodity markets. For example, a futures contract for soybeans could be adversely affected by news of world tariffs in a trade war. All it takes is a few days difference in the maturity date versus what was expected to lead to significant losses for the unaware investor.