Backwardation

Definition

A market condition in which futures prices are lower in the distant delivery months than in the nearest delivery month. This may occur when the costs of storing the product until eventual delivery are effectively subtracted from the price today. The opposite of contango.

Investing Essentials

Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University


Term of the Day

Statement of Additional Information (SAI)
A document provided as a supplement to a mutual fund prospectus. It provides more detailed information about fund policies, operations, and risks. Also known as a Part B prospectus.

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