Definition

A situation in a futures market where the prices for contracts to be delivered in the future are higher than the prices for contracts to be delivered sooner.

Example

In a contango market, investors expect prices to rise over time, leading to higher future prices.

Conversation

Have you heard about the concept of contango in futures trading?

Yeah, it’s when future prices are higher than current prices, right?

Exactly! It’s interesting how it can affect investment decisions.

For sure, understanding contango can really help when trading commodities.

Synonyms & Antonyms

Root Explanation

Contango is derived from the term 'contango' in finance, which is believed to originate from the word 'contango' in the 19th century, referring to the cost of carrying a commodity forward in time. The term is thought to be a variation of 'contango' from the Spanish 'contango', meaning to carry forward. It does not have clear Latin or Greek roots but is rooted in financial terminology.

Memory Tip

Think of 'contango' as the cost of 'carrying forward' a commodity in finance, which helps you remember that it refers to the future price of a commodity being higher than the spot price.

Visually Confused Words