Backwardation

From ACT Wiki
Revision as of 08:11, 22 August 2017 by Doug Williamson (Talk | contribs) (Layout.)

(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Jump to: navigation, search

1.

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.

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


3.

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