Broken Date

Broken date is a term used to describe a nonstandard maturity date for any type of financial deliverable. Broken dates can occur with options, futures, bonds and other trading instruments.

Broken dates may also be referred to as odd dates.

A broken date refers to any nonstandard maturity date assigned for a financial instrument. Financial instruments with a specified longevity may sometimes deviate from their final expected maturity date. Deviation may occur due to holidays, weekday schedules or timing that is set by the administrator.

Broken dates can be important to recognize for liquidity purposes. An entity owning a financial instrument should pay close attention to its actual maturity date as broken dates may occur and the instrument may not always be delivered on the exact maturity date expected.

In some cases, an issuer may also assign a maturity that does not follow a standardized schedule. Any type of nonstandard maturity can be known as a broken date or odd date. An investor should be aware of the final maturity date and never assume a date based on standardized longevity. Awareness of the final maturity or expiration date is important for an investor because it affects the trading price. For futures contracts the delivery date will be the same as the expiration. For options an investor should be aware of the exact expiration date on an option contract but they can typically exercise their option for delivery at any time. Bonds are also another common instrument where a broken or odd date may occur.

Many financial instrument contracts are quoted with periods of one month, three months, six months, one year, two years, etc. Just because a period is quoted for a financial instrument does not mean it will mature on that exact time schedule due to business day and other administrative factors.

An investor who buys a normal two-month forward contract for grain in April expects it to mature on the third Friday in June. Maturity at any other date would be considered a broken date or odd date. If a broken date occurs then the forward contract holder would receive their grain delivery notice on the broken expiration date.

Cyclical option contracts on the S&P 500 Index expire on the third Friday of the expiration month. If for any reason the contract expires on an alternate date then it would be considered a broken date or odd date.