Backwardation: Difference between revisions

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#In futures or options trading, an unusual market condition in which longer-term contracts carry a lower price than near-term contracts.  (The usual relationship - known as contango - is that longer-term contracts carry a higher price than near-term contracts.)
1. ''Futures trading.''
#The extent to which a spot price of a foreign currency plus carrying cost exceeds the forward price.
 
#More generally, any market conditions under which related market prices do not have their usual relationships to one other, potentially creating an arbitrage opportunity.  (Also sometimes known as a 'back price'.)
In futures or options trading, an unusual market condition in which longer-term contracts carry a lower price than near-term contracts.   
 
(The usual relationship - known as contango - is that longer-term contracts carry a higher price than near-term contracts.)
 
 
2. ''Foreign exchange - spot price.''
 
The extent to which a spot price of a foreign currency plus carrying cost exceeds the forward price.
 
 
3. ''Market conditions - price relationships.''
 
More generally, any market conditions under which related market prices do not have their usual relationships to one other, potentially creating an arbitrage opportunity.   
 
(Also sometimes known as a 'back price'.)




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* [[Arbitrage]]
* [[Arbitrage]]
* [[Contango]]
* [[Contango]]
* [[Cost of carry]]
* [[Forward contract]]
* [[Forward rate]]
* [[Forward rate]]
* [[Futures contract]]
* [[Spot rate]]
* [[Spot rate]]
[[Category:Manage_risks]]
[[Category:Financial_products_and_markets]]

Latest revision as of 07:51, 30 July 2022

1. Futures trading.

In futures or options trading, an unusual market condition in which longer-term contracts carry a lower price than near-term contracts.

(The usual relationship - known as contango - is that longer-term contracts carry a higher price than near-term contracts.)


2. Foreign exchange - spot price.

The extent to which a spot price of a foreign currency plus carrying cost exceeds the forward price.


3. Market conditions - price relationships.

More generally, any market conditions under which related market prices do not have their usual relationships to one other, potentially creating an arbitrage opportunity.

(Also sometimes known as a 'back price'.)


See also