noun
A state in which the price of a futures contract is lower than the eventual or expected spot price of the underlying commodity or security.
backwardation
THE AMERICAN HERITAGE® DICTIONARY OF THE ENGLISH LANGUAGE, FIFTH EDITION by the Editors of the American Heritage Dictionaries. Copyright © 2016, 2011 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.
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"backwardation." YourDictionary, n.d. Web. 07 December 2018. <https://www.yourdictionary.com/backwardation>.
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backwardation. (n.d.). Retrieved December 07th, 2018, from https://www.yourdictionary.com/backwardation
English Wiktionary. Available under CC-BY-SA license.
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Cite this page
MLA Style
"backwardation." YourDictionary, n.d. Web. 07 December 2018. <https://www.yourdictionary.com/backwardation>.
APA Style
backwardation. (n.d.). Retrieved December 07th, 2018, from https://www.yourdictionary.com/backwardation
backwardation - Investment & Finance Definition
In the futures market, a situation in which the price of the nearest, or active contract, is higher than the price of contracts further in the future. Typically, prices increase as the delivery months extend into the future. Backwardation occurs because, as a commodity or financial instrument is held for a longer period of time, it carries charges (such as storage charges), interest expenses, and insurance that have to be paid. Backwardation occurs only in unusual circumstances. A current shortage of product is one situation in which backwardation occurs.
Webster's New World Finance and Investment Dictionary Copyright © 2010 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.
Used by arrangement with John Wiley & Sons, Inc.
Link to this page
Cite this page
MLA Style
"backwardation." YourDictionary, n.d. Web. 07 December 2018. <https://www.yourdictionary.com/backwardation>.
APA Style
backwardation. (n.d.). Retrieved December 07th, 2018, from https://www.yourdictionary.com/backwardation
