Value Date: What Is Value Date? See Meaning And Definition

Value date definition and meaning; How do we make use of it?.

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A number of people use the term value date in a wide variety of situations, but what exactly does it mean? In form, the value date refers to a certain future date at which the value of some currency is determined. They use this term most commonly in the context of forward contracts where there will likely be large discrepancies in the future value (the value of an asset due to market fluctuations) caused by different timing, for example, with more deals traded on margin. It is also frequently used in commodity markets where there are large seasonal fluctuations caused by weather conditions and market timing. Know the basic forex Swaps.

Value Date Definition

Value Date

The value date is often defined as the date on which the maturity date for an option contract expires. The expiration date is specified in the option contract itself and may also be set by the exchange on which the contract is traded. The term value date in this instance refers to the actual date that option holders will receive the full amount of principal reduction from the underlying spot contract. The term maturity date on the other hand refers to the time period between the date of purchase and the expiration of the option. This difference refers to the period in which the option is exercised and the time period in which traders will receive their premium amount. Traders will be (OK) in both terms when determining the best possible option to buy or sell. Read eoption review

Factors To Compare

Traders will also want to compare the valuedate to the expiration instruction. The instruction refers to the last instruction of a put or call; Which they use to indicate when the currency options contract will close out at a specific price. In the Forex market this instruction may be set to indicate a day, hour, or even minute. Since the foreign exchange is based on the U.S. Eastern Time. If a trader wants to know when currency options contracts will close out a good option to purchase would be one that matches this expiration instruction. This means the price will close out at a certain price before it expires.

Another factor traders will need to compare is the spot rate. This refers to the current exchange rate between the spot currency and the stated value date. If a trader plans to make a large purchase or a short position. It is important to determine the effective spread. The spread is the difference between the bid ask spread or the brokerage spread between two particular markets.

To determine the effective spread a good value date to use is the expiration of the last trading day for the spot market. This is not necessarily the final trading day. But it will be the date where all orders for trading have been eliminated. Another factor traders will want to compare is the customer transfer value. This is the amount that would be paid to the broker for facilitating the transaction. Good value transactions will always have the customer transfer value less than the amount of the strike price. While they can still obtain small premium with these transactions. Only if they manage it properly they can still add substantial profit over time.

Value Date meaning In Forex

What is the value date in forex trading? Value date, in foreign exchange, is simply the date when the current value of an underlying asset fluctuates in value. The value date is typically used when there’s a high probability for discrepancies arising due to different reckonings of the actual time when an asset is purchased and sold.

For example, if two financial institutions have set different valuations for the same piece of foreign currency. Due to the wide disparity between the values, the value date will inevitably be sooner than the maturity date.

If the value date is earlier than the maturity date, sellers can exercise their right to auction or sell the forex contract before the maturity date. However, if the value date happens to be later than the maturity date, buyers of the foreign currency won’t have the opportunity to exercise the option to purchase or sell the currency until it matures. Make sure to read about Accrual in forex.


In closing Value date meaning and definition; Many traders will find it beneficial to research the best times to execute their option trades. However this is based on both the strike price and the value date. Utilizing the appropriate tools can make the entire process much easier. Some of the key links to look for include the expiration date, customer transfer value and the ubs. While these dates may not always apply directly to every situation. Some will apply more often then others, which is why research is key. Open a trading account 


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