Glossary › backwardation

Trading glossary · advanced

backwardation

When a deal to buy something later costs less than a deal for sooner, often because the thing is scarce right now.

The fuller meaning

A futures curve in which later contracts are priced below nearer ones, often because the asset is scarce now. It is the opposite of contango: rolling a long position forward then tends to earn rather than cost money, and the basis still shrinks toward zero at expiry.

backwardation.

Related words

at the money · backtest · basis · call option · contango · data snooping · delta · edge · entry trigger · exercise