1. contango - Noun
2. contango - Verb
The premium or interest paid by the buyer to the seller, to be allowed to defer paying for the stock purchased until the next fortnightly settlement day.
The postponement of payment by the buyer of stock on the payment of a premium to the seller. See Backwardation.
Source: Webster's dictionaryA futures contract in contango will decrease in value until it equals the spot price of the underlying at maturity. Source: Internet
If such is the case, the premium may have ended when global oil storage capacity became exhausted; the contango would have deepened as the lack of storage supply to soak up excess oil supply would have put further pressure on spot prices. Source: Internet
" The contango should not exceed the cost of carry, because producers and consumers can compare the futures contract price against the spot price plus storage, and choose the better one. Source: Internet
Interest rates If short-term interest rates were expected to fall in a contango market, this would narrow the spread between a futures contract and an underlying asset in good supply. Source: Internet
By the same token, a market that is deeply in contango may indicate a perception of a current supply surplus in the commodity. Source: Internet
In 2005 and 2006 a perception of impending supply shortage allowed traders to take advantages of the contango in the crude oil market. Source: Internet