Shorter duration futures contracts are becoming increasingly popular among traders due to their ability to limit the gap between futures and spot prices. This results in a lower premium compared to monthly standard and micro futures contracts.
The lower premium offered by shorter duration contracts means that the contango bleed, or the cost incurred from moving positions from the impending expiry to the following Friday expiry, is relatively less than with extended duration contracts. This ultimately leads to improved profitability for traders.
By choosing shorter duration futures contracts, traders can take advantage of these lower premiums and minimize their costs, ultimately increasing their potential profits in the market.
