Backwardation: Difference between revisions
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imported>Doug Williamson (Link with Cost of carry page.) |
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1. | 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. | 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. | |||
2. ''Foreign exchange - spot price.'' | |||
The extent to which a spot price of a foreign currency plus carrying cost exceeds the forward price. | The extent to which a spot price of a foreign currency plus carrying cost exceeds the forward price. | ||
3. | 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'.) | 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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* [[Contango]] | * [[Contango]] | ||
* [[Cost of carry]] | * [[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'.)
