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BACKWARDATION

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1. Backwardation is when the current price—spot—price of an underlying asset is higher than prices trading in the futures market

2. Backwardation is sometimes confused …

3. Backwardation definition is - the seller's postponement of delivery of stock or shares on the London Stock Exchange with the consent of the buyer upon payment of a premium to the latter.

4. Backwardation and the theory of Normal Backwardation

5. Backwardation in the futures market is normal because it is a movement that is consistent with prevailing market conditions

6. A market in Backwardation is bearish , and the investors expect the prices of the commodities to fall in the future.

7. Backwardation occurs when the current futures price trades below the current spot price of the underlying financial instrument

8. Backwardation In the chart below, the spot price is higher than future prices and has generated a downward sloping forward, or inverted, curve which is in Backwardation

9. Backwardation denotes a downward sloping curve where the prices for further-out contracts are lower than those of the nearer contracts

10. That is, a market in Backwardation has a forward curve that is downward sloping, as shown below

11. A market in Backwardation is often referred to as a “premium market” or “negative

12. When nearby prices are higher than deferred prices, that market is in Backwardation

13. Prices in deferred delivery months are progressively lower in a Backwardation or backwardated market

14. Futures Backwardation, Climbing Vaccination Rate Hints at Gains

15. We know Backwardation is an uncommon occurrence, and Exhibit 3 provides some historical context of how long Backwardation has lasted in prior periods

16. Backwardation happens very rarely, but this condition has been a reliable indicator that higher prices are on the way each time it has occurred over the past decade

17. As we wrote earlier, Backwardation actually aids investors' returns

18. Normal Backwardation: An Overview

19. Normal Backwardation, also sometimes called Backwardation, is the market condition where the price of a commodity's forward or futures contract is trading below the expected spot price at contract maturity

20. Backwardation happens very rarely, but this condition has been a reliable indicator that higher prices are on the way each time it has occurred over the past decade

21. Backwardation means the current value is higher than prices for later months and encourages traders to draw down oil supplies and sell promptly

22. Backwardation is the opposite of contango

23. Namely, Backwardation is the idea that the price of a futures contract for some future delivery of the underlying asset is lower than the current spot price

24. Backwardation definition: a situation in which the price of a commodity (= a product, such as oil or a metal, that is traded…

25. What is 'Backwardation' Backwardation is a theory developed in respect to the price of a futures contract and the contract's time to expire

26. Author: Brynne Kelly Backwardation had shown up in full force along the WTI curve everywhere except the front calendar spread

27. BUT, with the expiration of the February WTI contract last week, we said goodbye to contango and hello to Backwardation

28. The entire curve has now moved into Backwardation as of close of business January 22 beginning with the Mar-21/Apr-21 calendar spread …

29. Backwardation could inspire a shift back because it would have the opposite effect

30. The VIX futures curve is in Backwardation

31. Investors in commodities funds that hold futures contracts will hear or read the words contango and Backwardation

32. Backwardation is a market condition in which prices are lower for deferred delivery compared to nearby prices

33. Other terms of Backwardation are “negative carry” or “premium” market.

34. The Backwardation of $40 per ton is a sign of nearby tightness where demand exceeds available supplies

35. A few points--First, any Backwardation now is significantly less meaningful that it was when interest rates were more "normal"

36. So if someone is saying Backwardation, they're usually just talking about an inverted, an inverted futures curve

37. If someone talks about normal Backwardation or the theory of normal Backwardation, they're talking about the idea that the future price, the future delivery price is below the market's expected price.

38. If the price of a futures contract that expires in the near term is higher than the price of a contract with the same terms that expires at a later date, the relationship between the two is called Backwardation

39. Backwardation meaning: a situation in which the price of a commodity (= a product, such as oil or a metal, that is traded…

40. Backwardation can take place as a result of high demand for a specific asset currently in comparison to the contracts that will mature in the future through the futures market

41. Is Backwardation Good or Bad? The primary reason for Backwardation occurrence in the futures market of commodities is the lack of commodity in the spot market.

42. Backwardation has the following drawbacks and risks: If the future prices continue to fall as suggested by Backwardation, then investors may lose out on money

43. If new suppliers join the market and boost production then the effect of Backwardation fades away and the investors trading Backwardation

44. They are often in Backwardation

45. Backwardation is the opposite of contango

46. Backwardation in gold and silver is the consequence of interest rate manipulation by the government

47. Backwardation indicates that people prefer to be holding gold and silver, rather than fiat money (paper money) from a country (dollar, euro, etc.)

48. If paper money were reigning supreme, Backwardation in gold and silver would disappear, but this

49. It is the anticipated development of new pipeline capacity in the New England, Mid-Atlantic, and the Midwest regions that is damping pricing for 2018 and 2019 futures, producing Backwardation.

50. When Backwardation is in effect, the opposite forces are in play, supporting NYSEARCA:VXX prices and hindering NASDAQ:XIV prices

51. Why Contango And Backwardation Matter

52. Backwardation The opposite of contango is a backwardated market, where there is a premium on current oil prices over the future

53. The terms contango and Backwardation both refer to current conditions in a futures market for a given commodity

54. Backwardation definition, (on the London stock exchange) the fee paid by a seller of securities to the buyer for the privilege of deferring delivery of purchased securities

55. Backwardation, forex rbl, shortgolf design

56. Both care about whether commodity futures markets are contango markets or normal Backwardation markets.

57. Contango und Backwardation sind Begriffe, um die Struktur der Forwardkurve zu definieren

58. Umgekehrt liegt der Terminkurs eines Futures bei Backwardation unter dem Kassapreis.

59. Backwardation is a phenomenon seen in the futures market, which futures traders need to monitor

60. A forward curve is said to be in Backwardation when futures are traded at …

61. Backwardation set in and VXX remained above $40 for several months

62. Backwardation set in and VXX remained above $40 for several months

63. Backwardation is bearish indicator it also indicate an immediate shortage

64. There are two concepts of Backwardation • • Backwardation Normal Backwardation 9

65. Backwardation Definition It refers to the market situation where the Future prices are lower than the current spot prices for a particular commodity

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FAQ?

What does backwardation mean?

Definition of backwardation. 1 : the seller's postponement of delivery of stock or shares on the London Stock Exchange with the consent of the buyer upon payment of a premium to the latter.

What does backwardation mean for the gold market?

Backwardation in gold is a situation in which futures prices are lower than spot price of the same good (or futures prices are lower in succeeding delivery months). It is the opposite of contango in gold, which is a normal situation for non-perishable commodities which have a cost of carry.

What is backwardation and contango?

A contango market is also known as a normal market, or carrying-cost market. The opposite market condition to contango is known as backwardation. "A market is 'in backwardation' when the futures price is below the spot price for a particular commodity.

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