Backwardation: Difference between revisions
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* [[Futures]] | * [[Futures]] | ||
* [[Spot rate]] | * [[Spot rate]] | ||
[[Category:Manage_risks]] | |||
[[Category:Financial_products_and_markets]] | |||
Revision as of 11:47, 25 March 2021
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'.)
