Contango
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Contango is a futures market term that describes a normal market condition of expected rising prices in succeeding months.[1] In a market that is in contango, prices are progressively higher for each listed futures month of a contract.[2] Contango is the opposite of backwardation.[3][4]
In theory contango market conditions represent an increase in price from today's spot price plus the potential arbitrageur's cost of storage and the time-value of money.[5]
Other Meanings and Etymology
Originally, contango was defined as a fee paid by a stock buyer to the seller in order to postpone the delivery of the stock to a future date.[6] The etymology of the word is not clear, but is assumed to be a corruption or mis-pronunciation of the word "continue".[7]
Also See
References
- ↑ Oil speculation: It's back. Fortune. Retrieved on December 9, 2008.
- ↑ Contango - What's in a name?. Contango Oil & Gas Company. Retrieved on February 2, 2008.
- ↑ Glossary of Terms. U.S. Commodity Futures Trading Commission. Retrieved on February 2, 2008.
- ↑ Contango Lessons. Middle East Economic Survey. Retrieved on February 2, 2008.
- ↑ Peak Oil Contango?. The Oil Drum. Retrieved on February 2, 2008.
- ↑ Totally Weird and Wonderful Words. Mantex. Retrieved on November 04, 2008.
- ↑ James Mitchell, "Significant Etymology; Or, Roots, Stems, and Branches of the English Language.". Google Book Search. Retrieved on November 04, 2008.
