Dictionary Check: backwardation
"backwardation" is a valid word!
Scrabble
25
points
Words with Friends
28
points
Definition
noun
the market condition wherein the price of a forward or futures contract is trading below the expected spot price at contract maturity.
Example:
"In Treatise on Money (1930, chapter 29), economist John Maynard Keynes argued that in commodity markets, backwardation is not an abnormal market situation, but rather arises naturally as ‘normal backwardation’ from the fact that producers of commodities are more prone to hedge their price risk than consumers."
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