Contango


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Related to Contango: Backwardation

Contango

A market condition in which futures prices are higher in the distant delivery months.

Contango

A situation in which the futures price for an asset is higher than the expected future spot price. The futures price in contango declines to the future spot price as the futures contract approaches maturity. See also: Backwardation, Keynesian economics.

contango

In futures or options trading, a market in which longer-term contracts carry a higher price than near-term contracts. The premium accorded to longer maturities is a normal condition of the market and reflects the cost of carrying the commodity for future delivery. Compare inverted market.

Contango.

The price of a futures contract tends to reflect the cost of storage, insurance, financing, and other expenses incurred by the producer as the commodity awaits delivery.

So, typically, the further in the future the maturity date, the higher the price of the contract. That relationship is described as contango.

If the opposite is true, and the price of a longer-term contract is lower than the price of one with a closer expiration date, the relationship is described as backwardation.

contango

  1. an additional payment made by an investor or speculator who has purchased or sold a SHARE, STOCK etc. on the UK STOCK MARKET in return for being permitted to carry over the settlement of the share transaction from one ACCOUNT PERIOD to the next.
  2. a condition in a FORWARD MARKET where the most distant delivery months trade at a premium to the near term delivery months.
References in periodicals archive ?
To illustrate the effect of contango and backwardation on an oil ETF, let's look at the chart above.
Therefore, contango or backwardation is the difference between the price of oil in the following month's contract and the current price.
This is an important point to remember as we discuss the effect of contango and backwardation.
While the contango on crude futures has been volatile and as slender as 3 cents in October, the spread between the front two contracts of the gas oil curve on the IntercontinentalExchange (ICE) has widened since the summer.
With the HydroCell, Trulite has found a way to store a large amount of energy in a lightweight, compact package," said Contango Capital managing partner John Berger.
Contango expects an additional cash call in late-2012 of approximately $0.
As part of an agreement, Alta Energy will sell Contango Oil & Gas Company's interest in over 67,000 acres in the Kaybob Duvernay in Alberta, Canada.
Petrie Partners Securities LLC and Morgan and Lewis & Bockius LLP served as advisors to Contango, whereas Barclays Plc (LON:BARC) and Vinson & Elkins LLP counselled Crimson on the deal.
HOUSTON -- Contango Oil & Gas Company (NYSE Amex: MCF) announced today that Brad Juneau has joined the Company's Board of Directors and the Company has entered into an Advisory Agreement with Juneau Exploration, L.
The chairman of gas and oil company, Contango Oil & Gas Company (NYSE MKT:MCF) Kenneth R Peak has informed the company of his plan to sell up to 250,000 common stock under Rule 144 of the US Securities and Exchange Commission, it stated on Tuesday.
HOUSTON -- Contango Oil & Gas Company (NYSE Amex: MCF) announced today that as of March 31, 2012, the Company, through its wholly-owned subsidiary, Contaro Company, entered into a Limited Liability Company Agreement (the "LLC Agreement") to form Exaro Energy III LLC ("Exaro").