Definitions
from The American Heritage® Dictionary of the English Language, 5th Edition.
- noun A state in which the price of a futures contract is higher than the eventual or expected spot price of the underlying commodity or security.
from The Century Dictionary.
- noun On the London stock exchange, the charge made by a broker for carrying over a bargain to the next fortnightly settling-day; the consideration paid by the buyer of stock for the privilege of deferring settlement until the next settling-day.
from the GNU version of the Collaborative International Dictionary of English.
- noun (Stock Exchange), engraving The premium or interest paid by the buyer to the seller, to be allowed to defer paying for the stock purchased until the next fortnightly settlement day.
- noun (Law) The postponement of payment by the buyer of stock on the payment of a premium to the seller. See
Backwardation .
from Wiktionary, Creative Commons Attribution/Share-Alike License.
- noun The situation in a
futures market whereprices for futuredelivery are higher than prices forimmediate (or nearer) delivery. - noun The
amount by which prices for future delivery are higher than prices for near delivery. - noun obsolete, London Stock Exchange
Fee paid by abuyer to theseller onsettlement day when the buyer wishes to defer settlement until the next settlement day.
Etymologies
from The American Heritage® Dictionary of the English Language, 4th Edition
from Wiktionary, Creative Commons Attribution/Share-Alike License
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Examples
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In commodities lingo, the trading pattern is called contango.
Avoiding a Haircut on Crude Dan Strumpf 2011
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That increase from contract to contract is called contango, and it can cut into fund returns.
Playing With Your Food Liam Pleven 2011
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However, the company on Monday admitted that like other independent refiners, second-quarter results will be pressured by low margins amid increased crude costs and a contraction in a trading benefit known as contango, which in the first quarter helped earnings.
Western Refining Increases Size of Stock, Note Offering 2009
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A key dimension to continued pressure for higher prices is coming from various commodity funds trying to maintain a near-term contango in the futures market.
How High Will It Go? Oxford Analytica 2006
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George Gero, vice president with RBC Capital Markets Global Futures, said September copper has a premium over the next-most-active July contract beyond normal "contango" -- where farther-out prices are higher because of costs including storage.
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The forward curve for Nymex crude prices currently slopes upward -- known as a "contango" -- and is extraordinarily steep.
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The crude futures market is now in what oil traders call a "contango" - in which oil delivered in the next few weeks is cheaper than in the following months.
Market News 2009
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This leaves ETFs more prone to so-called contango effects, as well as vulnerable to tax hits and front-running — when traders can jump ahead of expected trades to profit from the subsequent demand.
Commodities Investors Favor Mutual Funds Over ETFs Sam Mamudi 2011
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Many advisers recommend against oil ETFs, which suffer from a market malady known as "contango."
Mining the Scarcity Boom Ben Levisohn 2011
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The expiring ones are usually worth less than the new ones—a condition known as "contango"—so they lose money with each roll.
Did 'Volatility Funds' Deliver? Ben Levisohn 2011
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