backwardation (redirected from Backwardization)

Backwardation

The theory that says futures prices will tend to rise over the life of a contract. Therefore the near-term contracts trade at a higher price than the longer-term contracts.

Notes:

This is the opposite of "contango."

See also: Contango, Futures, Inverted Market

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Backwardation

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.

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backwardation

See inverted market.